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tralac’s Trudi Hartzenberg: South Africa’s response to the COVID-19 pandemic
We’ve already seen that global cooperation and support are absolutely essential at this time. It is not only developing and least-developed countries that need assistance from others. The current experience of Italy and Spain, for example, is a very stark reminder that developed countries also need assistance. We cannot ignore the fact that we are inter-connected as communities, as societies, as regions, as the African continent, and of course globally. For all of us, both now and post-COVID-19, a fundamental recalibration of purpose, values, community and the nature of collective action is required. COVID-19 is a reminder that many 21st century challenges, including climate change, transcend national borders. While national responses are necessary, they are not sufficient. Hopefully COVID-19 will help us to reinvent multilateralism.
EU, 15 WTO members establish contingency appeal arrangement for trade disputes
The EU and 15 other members of the WTO today decided on an arrangement (pdf) that will allow them to bring appeals and solve trade disputes among them despite the current paralysis of the WTO Appellate Body. Given its strong and unwavering support for a rules-based trading system, the EU has been a leading force in the process to establish this contingency measure in the WTO. The Multiparty Interim Appeal Arbitration Arrangement mirrors the usual WTO appeal rules and can be used between any members of the Organisation willing to join, as long as the WTO Appellate Body is not fully functional.
Coronavirus could cut global investment by 40%, new estimates show (UNCTAD)
Updated estimates of COVID-19’s economic impact and revisions of earnings of the largest multinational enterprises (MNEs) now suggest that the downward pressure on FDI flows (pdf) could range from -30% to -40% during 2020-2021, much more than previous projections of -5% to -15%. Since then, 61% of the top 100 MNEs that UNCTAD tracks have issued earnings revisions that confirm the rapid deterioration of global prospects. And 57% have warned of the global demand shock’s impact on sales, showing that COVID-19 is causing problems beyond supply chain disruptions after a production slowdown in parts of China. In addition, the top 5,000 MNEs, which account for a significant share of global FDI, have now seen downward revisions of 30% on average for 2020 earnings estimates. And the trend is likely to continue. The hardest-hit sectors are the energy and basic materials industries (-208% for energy, with the additional shock caused by the recent drop in oil prices), airlines (-116%) and the automotive industry (-47%).
G20 Leaders’ Virtual Summit: selected updates
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Official statement: We are gravely concerned with the serious risks posed to all countries, particularly developing and least developed countries, and notably in Africa and small island states, where health systems and economies may be less able to cope with the challenge, as well as the particular risk faced by refugees and displaced persons. We consider that consolidating Africa’s health defence is a key for the resilience of global health. We will strengthen capacity building and technical assistance, especially to at-risk communities. We stand ready to mobilize development and humanitarian financing.
Consistent with the needs of our citizens, we will work to ensure the flow of vital medical supplies, critical agricultural products, and other goods and services across borders, and work to resolve disruptions to the global supply chains, to support the health and well-being of all people. We commit to continue working together to facilitate international trade and coordinate responses in ways that avoid unnecessary interference with international traffic and trade. Emergency measures aimed at protecting health will be targeted, proportionate, transparent, and temporary. We task our Trade Ministers to assess the impact of the pandemic on trade. We reiterate our goal to realize a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep our markets open.
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President Cyril Ramaphosa. The African Union Bureau met this morning and decided to give meaning to the concept of solidarity by establishing the African Coronavirus Fund to help fund Africa’s work in fighting this virus. A few African countries were able to raise $20m in just 30 minutes. We invite G20 countries to support this African initiative by donating to this fund. [Peter Fabricius: G20 nations back Ramaphosa’s appeal to give Africa economic aid to fight Covid-19]
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WBG President David Malpass. I’m particularly concerned about poor, densely populated countries such as India, where weak health systems need massively scalable investments in human capital, supplies and infrastructure. We are working hard to provide support through our public and private sector tools. We have new COVID-related projects underway in 56 countries, and we’re encouraging other MDBs to co-finance follow-up tranches. In 24 countries, we’re restructuring existing projects in order to direct funds to the health emergency.
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WTO Director-General Roberto Azevêdo hailed the group’s resolve to “ensure the flow of vital medical supplies, critical agricultural products, and other goods and services across borders,” part of a broader commitment to “minimize disruptions to trade and global supply chains”.
Related:
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UNECA: Three things the G20 must do to support Africa in COVID-19 Pandemic
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EAC: Joint statement by ministers responsible for Health and Ministers responsible for East African Community Affairs
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WTO DDG Alan Wolff: What is the WTO doing in response to the coronavirus?
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Landry Signé, Ameenah Gurib-Fakim: Africa is bracing for a head-on collision with coronavirus
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Botswana: IMF concludes 2019 Article IV Consultation (IMF)
The staff report reflects discussions with the Botswana authorities in November 2019 and is based on the information available as of 21 February 2020. It focuses on Botswana near- and medium-term challenges and policy priorities and was prepared before COVID-19 became a global pandemic and resulted in unprecedented strains in global trade, commodity, and financial markets. It, therefore, does not reflect the implications of these developments and related policy priorities. The outbreak has greatly amplified uncertainty and downside risks around the outlook. Staff is closely monitoring the situation and will continue to work on assessing its impact and the related policy response in Botswana and globally.
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Second review under the Staff-Monitored Program. The Somalia authorities have fulfilled the necessary conditions to reach the HIPC Decision Point, despite continuing challenges. This is a historic achievement and means Somalia has now cleared its arrears and normalized relations with the IMF and other international financial institutions. This will unlock Somalia’s access to new financial resources to fund much needed development and social spending.
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Poverty Reduction Strategy Paper: Joint Staff Advisory Note. NDP9 correctly highlights that Somalia’s external debt is unsustainable. The staffs welcome the government’s commitment not to engage in new external borrowing until debt falls to a sustainable level and capacity to repay improves. Even after receiving debt relief at the HIPC Completion Point, Somalia’s debt carrying capacity will be low. Any future borrowing should be carefully analyzed and aligned with Somalia’s future capacity to repay and with the objective of maintaining medium-term fiscal sustainability. Staffs stress that it is critical for the authorities to stay current on all their obligations falling due and not to accumulate any new arrears. The authorities will need to pursue a debt strategy that aligns the fiscal framework to this carrying capacity. As noted in the NDP9 document, strengthening the government’s debt management institutions will be important both during debt relief operations and for better debt management in the future. In this context, staffs encourage the authorities to strengthen the capacity of the Debt Management Unit by developing an action plan to swiftly improve its analytical, negotiation, recording, and reporting capacity.
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Enhanced HIPC Initiative-Decision Point document. Somalia meets the requirements to reach the Decision Point under the HIPC Initiative. A Debt Relief Analysis shows that Somalia qualifies for debt relief under the HIPC Initiative’s “export window” based on end-2018 data. After full application of traditional debt relief mechanisms, the country’s NPV of debt is estimated at $3.7bn at end-2018, equivalent to 344.2% of exports of goods and services. The amount of debt relief needed to bring Somalia’s NPV of debt-to-exports ratio down to the HIPC threshold of 150% is estimated at $2.1bn in end-2018 NPV terms. This implies a common reduction factor of 56.4%. As of 9 March 2020, creditors representing 76% of the NPV of eligible debt have committed to provide their share of debt relief under the HIPC Initiative.
Tanzania Mainland Poverty Assessment 2019 (Vol 2): Structural transformation and firms performance (World Bank)
Over the last two decades, private consumption and investment each contributed 3.1 pp to growth; now, services exports are also supporting growth. Between 2013 and 2017, private consumption contributed 2.4 pp to economic growth, accounting for 35% of total GDP growth, and investment contributed 3.6 pp to GDP growth, accounting for 52% (see Figure 1.4, pdf). Recently, the export-import profile has shifted. Tanzania continues to run a considerable trade deficit, mainly because of high goods imports, but the recent shift has been characterized by a lower value of imports and a higher value of exports. Between 2013 and 2017, exports of services grew at an annual compounded rate of 6.8% while imports of services fell by 5.3%. The resulting progressive reduction of the trade deficit drove up economic growth. For instance, the reduction of the trade imbalance contributed 2.1 pp to GDP growth in 2016 and 0.8 pp in 2017.
Determinants of global value chain participation: cross-country evidence (World Bank)
The past decades witnessed big changes in international trade with the rise of global value chains. Some countries, such as China, Poland, and Vietnam, rode the tide, while other countries, many in the Africa region, faltered. This paper studies the determinants of participation in global value chains, based on empirical evidence from a panel data set covering more than 100 countries over the past three decades. The evidence shows that factor endowments, geography, political stability, liberal trade policies, foreign direct investment inflows, and domestic industrial capacity are very important in determining participation in global value chains. These factors affect participation in global value chains more than traditional exports.
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Kenya: Digitised transactions law to boost ease of doing business
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Nigeria: How import substitution can alleviate pains of devaluation
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South Africa: Sasol to stop acetone exports to US after 414.92% anti-dumping duty
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ITC: Egypt’s textile and clothing sector gets jobs and exports boost
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Japan donates CHF 125,000 to help LDCs participate effectively in global trade
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TRAFFIC: Countering wildlife trafficking through Kenya’s ports
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Three things the G20 must do to support Africa in COVID-19 Pandemic
This is a global crisis affecting the whole world. Africa, however, will be hit harder with a heavy and durable economic toll, which will threaten progress and prospects, widen inequalities between and within countries, and worsen current fragilities.
African countries need support in preparing for the health crisis, and for the economic fallout. The measures being taken in Asia, Europe and North America such as physical (social) distancing and regular hand washing will be a particular challenge for countries with limited internet connectivity, dense populations, unequal access to water and limited social safety nets.
In line with the steps being taken across the globe, African countries are preparing for the worst effects of this pandemic.
Here are the three things the G20 must do:
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Support for an immediate health and human response
a. G20 leaders should support and encourage open trade corridors, especially for pharmaceuticals and other health supplies, as well as support for the upgrade of health infrastructure and provide direct support to existing facilities. This will enable countries to focus on prevention as much as possible and start building curative facilities. Support should be provided to WHO and CDC Africa with funds channelled through the Global Fund, GAVI and others.
b. G20 leaders should support public health campaigns and access to information including through an expedited private sector partnership for internet connectivity to enable economic activity to continue during social distancing measures and to support the effective sharing of information about the pandemic.
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Deliver an immediate emergency economic stimulus to African governments in their efforts to respond to the COVID-19 pandemic
a. G20 leaders should announce a US$100 billion (in addition to the $50bn already committed) to fund the immediate health response, social safety nets for the most vulnerable, feeding for out of school children, and to protect jobs. As a proportion of GDP this is consistent with measures taken in other regions. To ensure immediate fiscal space and liquidity, this package should include a waiver of all interest payments, estimated at US$44 billion for 2020.
b. G20 leaders should support a waiver on principal and interest for African Fragile States such as the Sahel, Central African Republic and others who are already struggling with the burden of debt and have limited fiscal space.
c. G20 leaders should endorse for enhanced predictability, transparency and accountability of financial flows so finance ministers can plan effectively and civil society stakeholders can help track flows to ensure reach those most in need.
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Implement emergency measures to protect 30 million jobs immediately at risk across the continent, particularly in the tourism and airline sectors
a. G20 leaders should take measures to support agricultural imports and exports, the pharmaceutical sector and the banking sector. An extended credit facility, refinancing schemes and guarantee facilities should be used to waive, restructure and provide additional liquidity in 2020.
b. G20 leaders should support a liquidity line available to the private sector operating in Africa to ensure essential purchases can continue and all SMEs dependent on trade can continue to function.
c. G20 leaders should ensure that national and regional stimulus packages covering private and financial systems include measures to support African businesses through allowing for the suspension of leasing, debt and other repayments to global businesses
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Extraordinary G20 Leaders’ Summit Statement on COVID-19
G20 leaders made a statement on COVID-19 after a virtual summit on 26 March 2020
The unprecedented COVID-19 pandemic is a powerful reminder of our interconnectedness and vulnerabilities. The virus respects no borders. Combatting this pandemic calls for a transparent, robust, coordinated, large-scale and science-based global response in the spirit of solidarity. We are strongly committed to presenting a united front against this common threat.
We are deeply saddened by the tragic loss of life and the suffering faced by people around the world. Tackling the pandemic and its intertwined health, social and economic impacts is our absolute priority. We express our gratitude and support to all frontline health workers as we continue to fight the pandemic.
The G20 is committed to do whatever it takes to overcome the pandemic, along with the World Health Organization (WHO), International Monetary Fund (IMF), World Bank Group (WBG), United Nations (UN), and other international organizations, working within their existing mandates. We are determined to spare no effort, both individually and collectively, to:
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Protect lives.
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Safeguard people’s jobs and incomes.
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Restore confidence, preserve financial stability, revive growth and recover stronger.
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Minimize disruptions to trade and global supply chains.
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Provide help to all countries in need of assistance.
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Coordinate on public health and financial measures.
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Fighting the Pandemic
We commit to take all necessary health measures and seek to ensure adequate financing to contain the pandemic and protect people, especially the most vulnerable. We will share timely and transparent information; exchange epidemiological and clinical data; share materials necessary for research and development; and strengthen health systems globally, including through supporting the full implementation of the WHO International Health Regulations (IHR 2005). We will expand manufacturing capacity to meet the increasing needs for medical supplies and ensure these are made widely available, at an affordable price, on an equitable basis, where they are most needed and as quickly as possible. We stress the importance of responsible communication to the public during this global health crisis. We task our Health Ministers to meet as needed to share national best practices and develop a set of G20 urgent actions on jointly combatting the pandemic by their ministerial meeting in April.
We fully support and commit to further strengthen the WHO’s mandate in coordinating the international fight against the pandemic, including the protection of front-line health workers, delivery of medical supplies, especially diagnostic tools, treatments, medicines, and vaccines. We acknowledge the necessity of urgent short-term actions to step up the global efforts to fight the COVID-19 crisis. We will quickly work together and with stakeholders to close the financing gap in the WHO Strategic Preparedness and Response Plan. We further commit to provide immediate resources to the WHO’s COVID-19 Solidarity Response Fund, the Coalition for Epidemic Preparedness and Innovation (CEPI) and Gavi, the Vaccine Alliance, on a voluntary basis. We call upon all countries, international organizations, the private sector, philanthropies, and individuals to contribute to these efforts.
To safeguard the future, we commit to strengthen national, regional, and global capacities to respond to potential infectious disease outbreaks by substantially increasing our epidemic preparedness spending. This will enhance the protection of everyone, especially vulnerable groups that are disproportionately affected by infectious diseases. We further commit to work together to increase research and development funding for vaccines and medicines, leverage digital technologies, and strengthen scientific international cooperation. We will bolster our coordination, including with the private sector, towards rapid development, manufacturing and distribution of diagnostics, antiviral medicines, and vaccines, adhering to the objectives of efficacy, safety, equity, accessibility, and affordability.
We ask the WHO, in cooperation with relevant organizations, to assess gaps in pandemic preparedness and report to a joint meeting of Finance and Health Ministers in the coming months, with a view to establish a global initiative on pandemic preparedness and response. This initiative will capitalize on existing programs to align priorities in global preparedness and act as a universal, efficient, sustained funding and coordination platform to accelerate the development and delivery of vaccines, diagnostics and treatments.
Safeguarding the Global Economy
We commit to do whatever it takes and to use all available policy tools to minimize the economic and social damage from the pandemic, restore global growth, maintain market stability, and strengthen resilience.
We are currently undertaking immediate and vigorous measures to support our economies; protect workers, businesses – especially micro-, small and medium-sized enterprises – and the sectors most affected; and shield the vulnerable through adequate social protection. We are injecting over $5 trillion into the global economy, as part of targeted fiscal policy, economic measures, and guarantee schemes to counteract the social, economic and financial impacts of the pandemic.
We will continue to conduct bold and large-scale fiscal support. Collective G20 action will amplify its impact, ensure coherence, and harness synergies. The magnitude and scope of this response will get the global economy back on its feet and set a strong basis for the protection of jobs and the recovery of growth. We ask our Finance Ministers and Central Bank Governors to coordinate on a regular basis to develop a G20 action plan in response to COVID-19 and work closely with international organizations to swiftly deliver the appropriate international financial assistance.
We support the extraordinary measures taken by central banks consistent with their mandates. Central banks have acted to support the flow of credit to households and businesses, promote financial stability, and enhance liquidity in global markets. We welcome the extension of swap lines that our central banks have undertaken. We also support regulatory and supervisory measures taken to ensure that the financial system continues to support the economy and welcome the Financial Stability Board’s (FSB) announced coordination of such measures.
We also welcome the steps taken by the IMF and the WBG to support countries in need using all instruments to the fullest extent as part of a coordinated global response and ask them to regularly update the G20 on the impacts of the pandemic, their response, and policy recommendations. We will continue to address risks of debt vulnerabilities in low-income countries due to the pandemic. We also ask the International Labour Organization (ILO) and the Organisation for Economic Cooperation and Development (OECD) to monitor the pandemic’s impact on employment.
Addressing International Trade Disruptions
Consistent with the needs of our citizens, we will work to ensure the flow of vital medical supplies, critical agricultural products, and other goods and services across borders, and work to resolve disruptions to the global supply chains, to support the health and well-being of all people.
We commit to continue working together to facilitate international trade and coordinate responses in ways that avoid unnecessary interference with international traffic and trade. Emergency measures aimed at protecting health will be targeted, proportionate, transparent, and temporary. We task our Trade Ministers to assess the impact of the pandemic on trade.
We reiterate our goal to realize a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep our markets open.
Enhancing Global Cooperation
We will work swiftly and decisively with the front-line international organizations, notably the WHO, IMF, WBG, and multilateral and regional development banks to deploy a robust, coherent, coordinated, and rapid financial package and to address any gaps in their toolkit. We stand ready to strengthen the global financial safety nets. We call upon all these organizations to further step up coordination of their actions, including with the private sector, to support emerging and developing countries facing the health, economic, and social shocks of COVID-19.
We are gravely concerned with the serious risks posed to all countries, particularly developing and least developed countries, and notably in Africa and small island states, where health systems and economies may be less able to cope with the challenge, as well as the particular risk faced by refugees and displaced persons. We consider that consolidating Africa’s health defence is a key for the resilience of global health. We will strengthen capacity building and technical assistance, especially to at-risk communities. We stand ready to mobilize development and humanitarian financing.
We task our top relevant officials to coordinate closely in support of the global efforts to counter the pandemic’s impacts, including through proportionate border management measures in accordance with national regulations and to provide assistance where necessary to repatriate citizens. We value the efforts to safeguard our people’s health through the postponement of major public events, in particular the decision by the International Olympic Committee to reschedule the Olympic Games to a date no later than summer 2021. We commend Japan’s determination to host the Olympic and Paralympic Games Tokyo 2020 in their complete form as a symbol of human resilience.
We stand ready to react promptly and take any further action that may be required. We express our readiness to convene again as the situation requires. Global action, solidarity and international cooperation are more than ever necessary to address this pandemic. We are confident that, working closely together, we will overcome this. We will protect human life, restore global economic stability, and lay out solid foundations for strong, sustainable, balanced and inclusive growth.
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Media Briefing on COVID-19 – Remarks by Minister of Trade, Industry and Competition, Ebrahim Patel
Government’s intervention measures on Coronavirus
Remarks delivered on 24 March 2020
The address by the President last night recognised that saving lives must be the priority and we need to draw on all our resources in the economy and within each of the major economic players to come through this with as little damage.
Across the world, more countries are now doing lockdowns and we want to ensure that it is managed in strong partnership with our people, with large and small businesses, with workers and with consumers.
Last night, the President identified a number of key interventions. Over the next few days, we will release more information as we finalise programmes and interventions.
IDC facility
The President announced that the IDC has put a package together with the Department of Trade, Industry and Competition of more than R3 billion for industrial funding to address the situation of vulnerable firms and to fast-track financing for companies critical to our efforts to fight the virus and its economic impact.
This facility will be available to South African owned businesses.
It is important that industry does not come to a standstill and therefore the Industrial Development Corporation (IDC) is responding to sector challenges that arise from this crisis whether these are surges in demand or those industries that are facing distress.
We have made two special interventions
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R500 million has been allocated for trade finance to import essential medical products;
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R700 million has been allocated for working capital and equipment and machinery
In addition to this, the IDC is engaging industry players to address surges in demand
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Ensuring food security by prioritizing support to Agriculture and food value chains
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Tourism sector support for working capital
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Bridging finance to support supply chain interruptions
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Working capital to ensure energy security by supporting suppliers of primary energy
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Working capital and Bridging Finance to SMEs that provide components to car-makers
In addition to the above, IDC has made available a capital allocation of R3 billion in the next quarter to support businesses during this crisis.
Essential services that fall outside of normal IDC sectors will be considered, as a measure we have now introduced during this period.
For existing clients, IDC is already in contact with its business partners to consider repayment deferments on a case-by-case basis.
Price increases - Consumer and Competition investigations into pricing of products
Last week we published a list of 22 critical products and categories which the National Consumer and Competition Commission will be monitoring closely to ensure that there are no unjustified price increases.
These include basic food items (like Rice, Maize meal, Milk, Canned Vegetables and Meats), Personal Care products (like Toilet paper, Baby formula and nappies), Hygiene products (like disinfectant, hand sanitiser, and cleaning agents) and key medical supplies (like surgical masks and gloves).
The Consumer and Competition Commissions are investigating 11 firms who have been found to be selling products like face-masks, hand sanitisers and other products, for high prices and abusing the situation. More firms are being investigated and prosecutions will follow.
These 11 firms which the regulators are investigating have been brought to the attention of the authorities by ordinary consumers. The National Consumer Commission has established a toll-free hotline (0800-014-880) and are also reachable on social media through Twitter (@NCC_COVID19)
Consumers can report unjustified price increases on any of these 22 products and other key products to the National Consumer Commission, and we encourage you to do.
Competition exemptions for banks and for retail
On Friday, we issued an exemption to banks under the Competition Act to coordinate on measures which can be used to support businesses and ordinary citizens during this period. It has been published in the Government Gazette yesterday.
The exemptions will allow South African banks to work together to devise programmes and relief measures which can help small businesses and consumers through these financial and economic challenges. In particular, the exemptions will enable banks to coordinate in respect of:
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payment holidays and debt relief for business and individual citizens subject to financial stress.
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limitations set on asset repossessions of business and individual citizens subject to financial stress.
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the extension of credit lines to individuals and businesses subject to financial stress.
The exemptions will allow banks to work together in ensuring continued functioning of the payments system, a critical component of the financial system. This includes sharing information and resources to ensure the continued availability of bank notes to ATMs, branches and businesses.
The COVID-19 National Disaster will put strain on our economy, including small business owners and ordinary citizens. With the Minister of Finance, we have been engaging the banking sector to work together in finding solutions and providing relief packages which will ease the burden on ordinary South African citizens, workers and business owners.
This is a time for all us to pull together as corporate and ordinary citizens to ensure that our people and economy come through this challenge with their lives, their jobs, their businesses, their livelihoods and their property intact. These banking exemptions are a critical step in ensuring an appropriate regulatory environment to do this work.
Essential services
Last night President Ramaphosa announced that companies that are essential to the production and transportation of food, basic goods and medical supplies will remain open during the 21-day “lockdown”. This means that essential personnel required for the continued functioning of these companies during the “lockdown” will be exempted from the stay-home provisions.
We will be publishing further guidelines tomorrow, ahead of the “lockdown”, which begins on Thursday evening just after midnight, in other words, the lockdown will come into effect the whole of Friday and beyond.
I can make a few preliminary comments now, with more detail to come in the coming days.
Grocery stores, supermarkets, and spaza shops will remain open during the “lockdown”.
We call on our people to limit the trips to shopping centres for the purpose of shopping for food and basic goods only, and not to gather in shopping malls. Pharmacies will remain open during the “lockdown”. Healthcare professionals providing essential services to the public will be open as well.
All essential items – food and beverages, medical suppliers, personal products, hygiene products, cleaning products – will remain available through the lockdown and the period of the national disaster. This means that all businesses essential for the production and distribution of these essential items will be allowed to remain in operation during the “lockdown”.
Businesses which remain in operation during the “lockdown” will be required to do so with all the staff required to ensure that the service or production is uninterrupted.
Businesses will also be required to take necessary protocols to ensure adequate hygiene and social distancing.
Consumer-facing businesses, like grocery stores, supermarkets, pharmacies and spaza shops, especially, will be asked to educate their staff and customers on the required protocols and to take reasonable steps to keep social distancing between customers.
There are a number of categories of essential services that due to time-constraints, the President could not mention yesterday.
These include essential staff in the following areas that are being looked at for inclusion in the Gazetted list:
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those responsible for essential care of the elderly and sick persons, including home-care and old-age homes
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essential private security services for the protection of property and persons
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All essential back-office services to enable salary and human resource departments to work so as to ensure smooth management of wage and salary payments
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essential animal welfare and emergency veterinary services
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those who assist in transporting food and other essentials to people’s homes including on-line retail, as well as transport systems that support any of the essential services
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key maintenance systems required at workplaces to avoid serious damage to economic assets, where the interruption of that service will destroy critical working areas, factories or machinery.
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Members of Parliament, Provincial legislatures, Municipal councils and their core staff, as well as government departments and public entities’ staff responsible to assist with implementation of the measures announced by the President, as they will all need to be working to make the country safe;
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members of the media and broadcasting services, who will serve as a vital communication between ourselves and the public.
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Transportation of fuel, food and basic goods supply trucks between SADC countries
The full list will be gazetted shortly. The purpose of this illustrative list is to show that we are taking into account the critical services that should remain open in this period.
During the lockdown, we strongly encourage all companies whose employees are able to work from home, to make the necessary arrangements for them to do so, as we need to maintain as much of the economic activity as we can during this critical period, so that we generate resources to finance the measures that we are undertaking.
The sooner we slow the spread of the disease, the sooner we can return to normal life and normal business. While some of may be exempt from the “lockdown” because the nature of our work, none of us are exempt from susceptibility of the virus.
Supply-chains and securing basic supplies
A number of businesses are essential services and will remain open during this period. We will publish further details and add specific businesses to the list as required.
While the limit of 100 people does not apply to essential services, we will still need all the affected businesses to take steps to protect workers through social distancing and public hygiene measures.
I am working with the Minister of Police and the Minister of Employment and Labour to ensure that police offices and health inspectors are well-briefed on the kinds of businesses which should be allowed to continue with larger numbers of people.
These include supermarkets, food production facilities, and farms.
These businesses, must however, take all necessary precautions to ensure adequate social distancing amongst customers and staff, and to educate staff on the appropriate hygiene protocols to counteract the spread of COVID-19. Where staff are not critical to the functioning of the operation, we encourage employers to allow those staff members to stay at home.
The steps that companies must take include
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Providing hand sanitisers at workplaces, as people enter, at key workstations and when they leave
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Managing clocking arrangements and canteen facilities and scheduling of work breaks, to limit the level of social interaction
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Disinfecting work surfaces that workers are exposed to
We are going into the month-end period where the numbers of South Africans in grocery stores and supermarkets naturally increases. We are working with major grocery retailers to ensure that there are appropriate protocols to ensure social distancing, and that their shelves remain well-stocked.
We appeal to all our people to remain calm and to buy only what the need for their immediate requirements. We are keeping the full food supply-chain open, from farms and fisheries, to factories, transport systems and shops, so that we can have food available in this period and beyond. This is a moment to show our caring for each other and to resist any effort to score from the crisis.
Shopping mall tenants
A number of shops and other businesses in shopping malls have already seen a decline in their turnover. They face significant fixed costs, including rents and costs specified in leases.
We will publish a special Gazette today, to enable tenants who are competitors to meet and to reach agreements with shopping mall owners and to address matters such as
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Payment holidays or rental discounts and
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Limitations on evictions.
These initially cover three categories of retailers, being
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Personal care functions
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Restaurants and
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Clothing, footwear and home-textile shops.
These categories will be expanded as required in the next few days.
Solidarity Fund
Last night President Cyril Ramaphosa announced the creation of the Solidarity Response Fund. The Solidarity Response Fund is designed to unite the nation and to accelerate the country’s response to COVID-19.
The Focus of the fund is to alleviate the suffering and distress caused by the virus to our country and will mobilise the support of business and civil society in support of government’s efforts in response to COVID-19.
Government has made an initial R150 million available as seed funding and a number of businesses will be contributing within the next few days. R100m of this is from National Treasury; and R50m from the National Lotteries.
The Chairperson of the Fund is Ms Gloria Serobe and the Vice Chairperson is Mr Adrian Enthoven. The Fund will be independently administered and transparently governed through an independent board to ensure that the funds are effectively and efficiently used to combat COVID-19.
The fund will be a rapid response vehicle through which contributions from citizens, communities, business and international donors can be pooled together to primarily fund four key initiatives:
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Prevent: preventative and supporting measures to “flatten the curve” by lowering infection rates
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Detect: detect and understand the magnitude of the infection problem
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Care: assist with the management of those people in hospital or medical care
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Support: support those people whose lives are disrupted by COVID-19.
Organized business is assisting with the initial formation of the Fund and thereafter the Board which is being appointed will take full responsibility for the fund and its activities.
Details on how to donate will be available on the Fund’s website www.solidarityfund.co.za
Trade with neighbours
We will take all steps to keep open trade links with neighbours to ensure that we have food-supply across the region and that we come through this together as neighbours. The controls on movement of people will not affect the movement of goods across borders with our neighbours.
Thank you!
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tralac’s Daily News selection
Tomorrow: G20 leaders will convene by video conference to discuss coronavirus
Leaders from the Group of 20 major economies will convene a video conference on Thursday to discuss the coronavirus epidemic, the Saudi secretariat said, amid criticism that the group has been slow to respond to the global crisis. G20 finance ministers and central bankers agreed during a separate video conference this week to develop an “action plan” to respond to the outbreak, which the International Monetary Fund expects will trigger a global recession. A subsequent statement offered few details. [António Guterres: G20 summit provides chance to rally strongly against coronavirus threat]
Jim O’Neill: The G20’s Pandemic Moment (Chatham House)
Now consider the economics of social distancing. As soon as it became apparent that our policymakers were heeding the Chinese method of trying to suppress COVID-19, it was immediately obvious that our economies would - at least for a short period - sustain the collapse of GDP that China self-imposed in February. From industrial production and other regular monthly data, the Chinese economy has declined by around 20%. It is quite likely many other economies - probably each of the G7 countries - will experience something not too dissimilar in March. And, to stop our complex democracies from further immediate pressure including social disharmony, governments in many countries have needed to undertake dramatic unconventional steps. Here in the UK, our new chancellor effectively had three budgets within less than a fortnight. And outside of the £330bn loan policy he has announced, at least £50bn worth of economic stimulus has been announced.
World Bank Group, IMF Call to Action on debt of IDA countries
With immediate effect - and consistent with national laws of the creditor countries - the World Bank Group and the International Monetary Fund call on all official bilateral creditors to suspend debt payments from IDA countries that request forbearance. This will help with IDA countries’ immediate liquidity needs to tackle challenges posed by the coronavirus outbreak and allow time for an assessment of the crisis impact and financing needs for each country. We invite G20 leaders to task the WBG and the IMF to make these assessments, including identifying the countries with unsustainable debt situations, and to prepare a proposal for comprehensive action by official bilateral creditors to address both the financing and debt relief needs of IDA countries. We will seek endorsement for the Proposal at the Development Committee during the Spring Meetings (April 16–17).
Karen Ongley, Abebe Aemro Selassie: Protecting the health of Africa’s people and their economies (IMF)
The IMF is making $50bn available via rapid-disbursing emergency facilities, including $10bn on highly concessional terms for low‑income countries. With this, we are accelerating efforts to back countries in the region. So far, we’ve received requests for emergency financing from close to 20 countries, with requests from another 10 or more countries likely soon. Our member countries need us more than ever. Discussions between IMF teams and country officials are advancing quickly, and we expect the first wave of this support to be delivered in early April. The pandemic will have a substantial economic impact on sub-Saharan Africa, in three ways:
David Ndii: Thoughts on a pandemic, geoeconomics and Africa’s urban sociology (The Elephant)
Where things go from there will depend on how much external financial support from international finance institutions – bailouts if you like – will be available. The IMF has announced that it could make up to $50bn available quickly to low-income and emerging market countries. This is not much – it’s less that the IMF’s 2018 bailout package to Argentina ($57bn). Besides this, the IMF can lend its members normal loans of up to a total of a trillion dollars. (A trillion dollars is in the order of 1.2% of global GDP.) Although the IMF uses a complicated formula for each country’s quota, I will use pro rata to illustrate how the IMF might allocate bailouts. On a pro rata basis, Nigeria could borrow $4.5bn, Kenya could borrow $0.8bn and Ghana could borrow $0.5bn. By way of comparision, Kenya’s lapsed precautionary facility was $1.5bn, while the facility recently extended to Ethiopia is $2.7bn. If every emerging market needs a bailout as a result of the financial crisis, there won’t be enough to go round.
There is, however, another source of financing that is yet to be talked about, namely, moratoria on bilateral and multilateral debt service. Historically, the multilateral agencies (i.e. World Bank, IMF and African Development Bank-AfDB) are treated as preferred creditors whose debt is non-negotiable. In reality, countries in distress do build up arrears. In terms of substance, a moratorium on repayment translates to the same thing as extending new budget support loans. China, which is now taking the lion’s share of debt service for many countries, could demonstrate that it is indeed a friend of Africa by giving African countries some breathing space on debt repayments.
Afreximbank’s $3bn Pandemic Trade Impact Mitigation Facility
The facility (PATIMFA) will support member country central banks, and other financial institutions to meet trade debt payments that fall due and to avert trade payment defaults, said Afreximbank. It will also be available to support and stabilize the foreign exchange resources of central banks of member countries, enabling them to support critical imports under emergency conditions. In addition, PATIMFA will assist member countries whose fiscal revenues are tied to specific export revenues, such as mineral royalties, to manage any sudden fiscal revenue declines as a result of reduced export earnings. It will also provide emergency trade finance facilities for import of urgent needs to combat the pandemic, including medicine, medical equipment, hospital refitting, etc. The facility will be available through direct funding, lines of credit, guarantees, cross-currency swaps and other similar instruments, according to Afreximbank.
East Africa: Regional trade hit as virus slows down border clearance (Business Daily)
With border closures announced to contain the spread of the coronavirus pandemic, the road transport sector has been hardest hit. The road transport accounts for over 60% of goods movement from ports of entry to the region. Besides shutting of the borders, more checks have been introduced to minimise exposure and curtail export of the virus. Logistics experts have predicted business could reduce by more than half going forward, with players calling for measures to minimise disruption and provide a critical service. Kagure Wamunyu, Africa region chief executive officer at Kobo360, said logistics business will drop by 50% since borders trucks are spending up to two days before they cross the border due to the stringent checks.
Kenya’s borders with Uganda and Tanzania have been shut, with minimal truck movement. This has led to delays in delivery of goods within the region. Mombasa is the gateway to East African countries of Uganda, Rwanda, Burundi, DRC, and South Sudan served by the Northern Corridor. According to the Northern Corridor Transit and Transport Coordination Authority observatory dashboard, 4,397 trucks crossed the Mariakani weighbridge, down from 4,657 the previous week, a number that was expected to reduce during the March 11 and 17 week. At the Malaba border, the average time between issuance of release order and issuance of certificate of export at border crossing between March 11 to March 17 was 80.25 hours, down from 104.30 hours, signaling the small number of trucks that were crossing the border.
The International Chamber of Shipping and the International Association of Ports and Harbours have joined forces to call on G20 leaders to act quickly to protect global supply chains from the impact of COVID-19. In an open letter the two organisations representing the global shipping industry and the worlds ports and harbours set out that:
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William Mosely: How will COVID-19 affect Africa’s food systems?
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Wandile Sihlobo: What COVID-19 means for South Africa’s agriculture and food supplies
Tanzania: Mainland Poverty Assessment (World Bank)
The analysis is contained in two parts. The first part is based on the results of the Household Budget Surveys for 2017-18, 2007, and 2011-12; several rounds of National Panel Surveys; and Demographic Health Survey data; it also combines spatial information from the population census and other sources with HBS data to (1) provide a rigorous analysis of the evolution, profile, and determinants of poverty and inequality; (2) explore movements in and out of poverty and their drivers; and (3) examine the distribution of poverty and living conditions across the country at a detailed geographic level. The second part examines the pattern of structural transformation, firm profiles, job creation, and financial inclusion using the rebased GDP figures released in February 2019, plus data from the Statistical Business Register, Census of Industrial Production, national accounts, NPS, Integrated Labor Force Surveys, and other sources. Extract (pdf):
About 96% of Tanzanian firms have fewer than 10 workers and only 1% have more than 50. Among the smallest firms, 60% have only one or two workers. Because nearly half of the firms are not registered anywhere, they are considered informal. Tanzanian firms tend also to be fairly young, with a median age of four years. In general, particularly in wholesale and retail trade and manufacturing, micro and small firms are likely to be informal and younger. Their small startup capital is financed essentially from personal income. Meanwhile, large businesses tend to be older and mainly engaged in formal nonmarket services such as education or health (many are State owned); it may be that formal firms operating in public services have higher chances of surviving and growing.
Two-thirds of Tanzanian firms are in manufacturing and trade. About 35% are in manufacturing and 34% in wholesale and retail trade. Manufacturing firms primarily produce food and beverages (39%); textiles, wearing apparel, and leather (30%); and furniture (14%). Only 1% are in high-value-added and knowledge-intensive industries. The rest operate essentially in services, especially nonmarket services. Less than 1% are in agriculture; most people working in that sector run their own farms without creating a business.
Key statistics and trends in trade policy 2019: Retaliatory tariffs between the United States and China (UNCTAD)
This report is structured in two parts. The first part presents a discussion on ongoing trade tensions between the United States and China. The second part discusses trends in selected trade policy instruments including illustrative statistics. The second part is divided into five chapters: tariffs, trade agreements, non-tariff measures, trade defence measures, and exchange rates. Trade trends and statistics are provided at various levels of aggregation illustrating the use of the trade policy measures across economic sectors and geographic regions. Extract (pdf):
In terms of export restrictiveness, transition economies and sub-Saharan African and Latin American countries faced the most liberal market access conditions with an MA-TTRI of about 1.5% in 2018. This was largely due to unilateral preferences granted by developed countries and an export composition tilted towards natural resources that typically face low tariffs. In contrast, exports from East and South Asia faced a higher average level of restrictiveness, about 3.%. For many countries in these regions, trade liberalization in major trading partners aimed at lowering tariffs can still produce substantial export gains.
In view of generally low tariffs, and even when all concessions such as unilateral and reciprocal preferential schemes are taken into account, there remain a significant number of products for which tariffs are relatively high. These high tariffs (above 15%) are generally referred to as tariff peaks and are usually levied on sensitive products. Tariff peaks appear in the tariff structure of many developing countries, but with different patterns. For example, tariff peaks are a large part of the tariff structure of agricultural products of developing countries in South Asia and sub-Saharan Africa, but this is not the case in the transition economies (Figure 5a). Tariff peaks tend to be less prevalent in manufacturing, and less so in natural resources sectors. Tariff peaks tend to be concentrated in some of the products of interest to low income countries, such as the agricultural sectors, but also apparel, textiles and tanning. For example, tariffs on about 10% of international trade in food products (and 25% of the products in this group) are higher than 15% (Figure 5b). Similarly, about 10% of international trade in apparel is subject to a tariff of 15% or more.
The Future of Work in agriculture: some reflections (World Bank)
In the world’s poorest countries, particularly in Africa, labor productivity in agriculture remains at historically low levels. So, what can the role of agriculture as a source of employment be in the future? This viewpoint elaborates on these trends and reviews several policy options, including inclusive value chain development, better immigration policies, social insurance schemes, and ramp up in agricultural education and extension. Extract (pdf):
In China, agricultural wages are keeping pace with non-farm wages, and this underlines the important role of agricultural investments in the development process. In Sub-Saharan Africa, the agricultural share of public spending continues to be well below that in East Asia (3% on average during 1980-2012 versus 8% in Asia). Myriad input, factor, and output market constraints hold agricultural labor productivity back, and integrated solutions that simultaneously overcome a number of these constraints are needed. Inclusive value chain development (iVCD), which links farmers with buyers in contracting arrangements, offering knowledge, access to credit and inputs, and higher (less volatile) prices in exchange for a consistent volume of high-quality produce, provides a market-based solution to do so. Given the challenge to develop self-enforcing incentive compliant contracts, however, iVCD typically does not work well for raising staple crop productivity. Yet, in low income countries, this is where the need and scope for raising labor productivity and poverty reduction is highest. For raising labor productivity in staple crops, more and better public investment in public goods is needed. [The authors: Luc Christiaensen, Zachariah Rutledge, J. Edward Taylor]
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World Bank Group increases COVID-19 response to $14 billion to help sustain economies, protect jobs
Focus on private sector and workers spearheaded by IFC to mitigate financial and economic impact of crisis
The World Bank and IFC’s Boards of Directors on 17 March 2020 approved an increased $14 billion package of fast-track financing to assist companies and countries in their efforts to prevent, detect and respond to the rapid spread of COVID-19. The package will strengthen national systems for public health preparedness, including for disease containment, diagnosis, and treatment, and support the private sector.
IFC, a member of the World Bank Group, will increase its COVID-19 related financing availability to $8 billion as part of the $14 billion package, up from an earlier $6 billion, to support private companies and their employees hurt by the economic downturn caused by the spread of COVID-19.
The bulk of the IFC financing will go to client financial institutions to enable them to continue to offer trade financing, working-capital support and medium-term financing to private companies struggling with disruptions in supply chains. IFC’s response will also help existing clients in economic sectors directly affected by the pandemic – such as tourism and manufacturing – to continue to pay their bills. The package will also benefit sectors involved in responding to the pandemic, including healthcare and related industries, which face increased demand for services, medical equipment and pharmaceuticals.
“It’s essential that we shorten the time to recovery. This package provides urgent support to businesses and their workers to reduce the financial and economic impact of the spread of COVID-19,” said David Malpass, president of the World Bank Group. “The World Bank Group is committed to a fast, flexible response based on the needs of developing countries. Support operations are already underway, and the expanded funding tools approved today will help sustain economies, companies and jobs.”
The additional $2 billion builds on the announcement of the original response package on March 3, which included $6 billion in financing by the World Bank to strengthen health systems and disease surveillance and $6 billion by IFC to help provide a lifeline for micro, small and medium sized enterprises, which are more vulnerable to economic shocks.
“Not only is this pandemic costing lives, but its impact on economies and living standards will likely outlive the health emergency phase. By ensuring our clients sustain their operations during this time, we hope the private sector in the developing world will be better equipped to help economies recover more quickly,” said Philippe Le Houérou, Chief Executive Officer of IFC. “In turn, this will help vulnerable groups to more quickly recover their livelihoods and continue to invest in the future.”
Having mobilized quickly at the time of the 2008 global financial crisis and the Western African Ebola virus epidemic, IFC has a successful track record of implementing response initiatives to address global and regional crises hampering private-sector activity and economic growth in developing countries.
The IFC response has four components:
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$2 billion from the Real Sector Crisis Response Facility, which will support existing clients in the infrastructure, manufacturing, agriculture and services industries vulnerable to the pandemic. IFC will offer loans to companies in need, and if necessary, make equity investments. This instrument will also help companies in the healthcare sector that are seeing an increase in demand.
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$2 billion from the existing Global Trade Finance Program, which will cover the payment risks of financial institutions so they can provide trade financing to companies that import and export goods. IFC expects this will support small and medium-sized enterprises involved in global supply chains.
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$2 billion from the Working Capital Solutions program, which will provide funding to emerging-market banks to extend credit to help businesses shore up their working capital, the pool of funds that firms use to pay their bills and compensate workers.
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A new component initiated at the request of clients and approved on March 17: $2 billion from the Global Trade Liquidity Program, and the Critical Commodities Finance Program, both of which offer risk-sharing support to local banks so they can continue to finance companies in emerging markets.
IFC is already working to deploy its response financing. For example, we recently expanded trade-financing limits for four banks in Vietnam by $294 million so they could continue lending to companies in need, especially small and medium-sized enterprises.
IFC will maintain its high standards of accountability, while bearing in mind the need to provide support for companies as quickly as possible. IFC management will approve projects based on credit, environmental and social governance and compliance criteria, as applied in past crisis responses.
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Implementation of AfCFTA faces delay due to COVID-19 (Ghanaweb)
Approval of phase one operational instruments required for the start of duty free trading within the Africa Continental Free Trade Area in July this year hangs in a balance following the continuous impact of the novel Coronavirus Disease (COVID-19) infections that has brought global activities to a standstill. Despite the swearing-in ceremony of the first Secretary-General of AfCFTA, Wamkele Mene last week in Ethiopia – an event which should have been held in Accra on 31st March, 2020 – the growing list of cancellations and postponements of various activities this year because of COVID-19 could potentially delay implementation of AfCFTA in July.
Following the 2nd meeting of AfCFTA Council of Ministers held in December last year in Accra, it was agreed that AfCFTA Council of Ministers should meet in South Africa for an Extraordinary Summit on 30 May 2020 to approve all instruments under the agreement. The Executive Council of the African Union had earlier directed the AU Commission to convene the necessary meetings to conclude remaining work on Rules of Origin, schedules of tariff concessions and schedules of specific commitment on the five priority service sectors by end of March 2020 to enable the finalization of tariff offers and submission of the final report on Rules of Origin to the Extraordinary Summit in South Africa. However, as the rate of COVID-19 infections continue to surge on the continent which has forced countries to take some drastic decisions including travelling restrictions among others, it is likely that the Extraordinary Summit will be postponed.
Coronavirus hits Africa’s mega trade deal plans (POLITICO)
“It would be unreasonable for any government to direct resources to meet the deadline when the public’s health is so gravely at stake,” Wamkele Mene told POLITICO, adding that he expected heads of state to announce a delay in the coming weeks. “My view now is that the focus should be on saving lives.” Stephen Karingi (director of the trade division at the UNECA): There “is definitely going to be a delay” to the 1 July launch date. “We are already out of the schedule.”
Ethiopia pleads to G20 to rescue African economies. The Government of Ethiopia has proposed measures to be taken by the rich G20 countries, which includes, release of Africa Global COVID-19 Emergency Financing Package — $150bn, supplementary budgetary support, cancellation of all interest payment to government loans and converting remaining debts into long term low interest loans with 10 years grace period before payment, among others. “Africa’s ability to take even modest measures to inject liquidity and cushion its companies and workers from the impact of this calamity are further constrained by the heavy debt burden, the servicing of which alone costs many of them significantly more than their annual health budgets,” it said the Government of Ethiopia in a statement labeled, ‘Three Points Proposal from the Government of Ethiopia to G20’.
Malawi: Statement at the end of an IMF staff visit. With the evolution of the COVID-19 outbreak still largely unknown, the economic outlook is subject to substantial uncertainty. The recent strong agricultural harvests and reconstruction activity after Cyclone Idai have boosted growth, but the growth path for the remainder of the year will depend on the extent of transmission to Malawi of COVID-19 and the magnitude of associated global and regional economic spillovers. Notwithstanding the effects of COVID-19 on the economy, over the medium-term, growth may rise further to 6-7%, backed by infrastructure that is more resilient to shocks from climate change, improved access to finance, crop diversification, and an improved business climate. Inflation is anticipated to decline from 11.5% at end-2019 to 9.3% at end-2020, as elevated food inflation moderates, and gradually converge to 5% over the medium term. The key risk is the potential for deeper disruption to economic activity in Malawi from the spread of COVID-19.
Kenya to seek IMF help, pay arrears, speed tax refunds over coronavirus. Patrick Njoroge, the central bank governor, told a news conference on Tuesday that the government is seeking emergency assistance from the IMF of up to $350m. “This is assistance that doesn’t have the conditionalities of programs ... a lot of this could be directed towards budget support,” Njoroge said, adding that more support will be sought from the World Bank. Kenya has 16 confirmed cases of COVID-19, and the disease is hurting crucial tourism and farm exports. The government expects revenue collection to be hit as both imports and domestic consumption slow, Finance Minister Ukur Yatani told Reuters late on Monday. “We are looking at underperformances as a result of just COVID-19, of about 70 billion (shillings) ... in terms of revenue for the remaining three months (of this financial year),” he said, adding that situation was evolving fast.
Botswana, South Africa trade not to be disturbed by COVID-19. Botswana’s Vice President Slumber Tsogwane has allayed fears of a trade void between Botswana and South Africa, as the latter embark on a countrywide lockdown on Thursday. Addressing the nation on Tuesday, though the national broadcaster, Tsogwane said South Africa’s President Cyril Ramaphosa has assured Botswana trade will not be disrupted.
Coronavirus supply disruptions are the next worry for metals. The spread of the coronavirus across the world has focused metals markets on the risks to demand, causing prices to plummet, but so far investors have largely ignored the mounting threats to supply. A hint of what may be coming was South Africa’s decision on Monday to impose a 21-day nationwide lockdown to try and contain the epidemic, a move that will affect the nation’s mines. South Africa is the world’s largest producer of platinum, the second-largest of palladium and is also a major exporter of thermal coal, iron ore and gold. The country dominates global platinum production, with its output of about 130 tonnes in 2019 nearly six times more than the next biggest producer, Russia. Like most metals, platinum had been hit hard by the sell-off as the coronavirus spread from its source in China to Europe and North America, prompting several nations to shut down much of their economies to contain the disease.
DG Azevêdo requests WTO members to share information on trade measures related to COVID-19. In a 24 March message asking all members to submit information to the WTO Secretariat about recent trade and trade-related measures, DG Azevêdo called specific attention to the policies members had introduced in response to the coronavirus outbreak. “The current COVID-19 pandemic represents an almost unprecedented health crisis, and members are understandably responding by introducing legislation and policies to seek to combat this health emergency,” he wrote. “These include measures that are trade-related, such as export measures and economic support programmes.” [WTO’s COVID-19 and world trade resources page]
G20 Finance Ministers and Central Bank Governors conference call: IMF Managing Director Kristalina Georgieva. Third, what can we, the IMF, do to support our members?
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We are concentrating bilateral and multilateral surveillance on this crisis and policy actions to temper its impact. We will massively step up emergency finance - nearly 80 countries are requesting our help - and we are working closely with the other international financial institutions to provide a strong coordinated response.
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We are replenishing the Catastrophe Containment and Relief Trust to help the poorest countries. We welcome the pledges already made and call on others to join. We stand ready to deploy all our $1 trillion lending capacity.
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And we are looking at other available options. Several low- and middle-income countries have asked the IMF to make an SDR allocation, as we did during the Global Financial Crisis, and we are exploring this option with our membership.
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Major central banks have initiated bilateral swap lines with emerging market countries. As a global liquidity crunch takes hold, we need members to provide additional swap lines. Again, we will be exploring with our Executive Board and membership a possible proposal that would help facilitate a broader network of swap lines, including through an IMF-swap type facility.
IFC’s response to COVID-19 pandemic has four components. #2: $2bn from the Global Trade Finance Program, which will cover the payment risks of financial institutions so they can provide trade financing to companies that import and export goods. IFC expects this will support small and medium-sized enterprises involved in global supply chains.
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IMF statement: Ghana requests Rapid Credit Facility Disbursement to help fight the Coronavirus
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Bloomberg: Virus fallout may cushion South African assets from junk rating
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Statement: COVID-19 in COMESA (pdf)
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African Trade Insurance Agency affirms support for African business now and during the post-COVID-19 crisis recovery
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ILO: Almost 25 million jobs could be lost worldwide as a result of COVID-19
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Anis Chowdhury, Jomo Kwame Sundaram: Stronger UN leadership needed to cope with coronavirus threat
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Crisis Group on COVID-19 and conflict: Seven trends to watch
South Africa’s foreign direct investment dips in 2019 (Reuters)
South Africa saw a dip in foreign direct investment in 2019 compared to the previous year, with inflows falling to R66.8bn ($3.78 billion) from R72.1bn, the central bank said on Tuesday. A key part of President Cyril Ramaphosa’s plan to revive growth in Africa’s most developed economy hinges on luring foreign capital, but prolonged power outages caused confidence among investors to wane along with industrial activity. The sharp jump in local coronavirus infections, which saw Ramaphosa announce a nationwide lockdown for 21 days starting on Thursday, is set to pile further pressure on an economy already in recession and suffering intense financial market volatility.The bank’s figures in the quarterly bulletin showed equity outflows of nearly R63bn in 2019, with sales of R33bn in the fourth quarter and R32bn in the third.
How Lesotho, one of the world’s most unequal countries, became a lot more equal (World Bank Blogs)
For years, together with its Southern African neighbors, Lesotho was one of only a handful of countries in the world with a Gini coefficient above 50. However, a recent assessment of poverty and inequality in the country suggests that it has made considerable progress towards a more equal society. In 2017 the Gini coefficient stood at 44.6, which, although still high in a global context, marks an impressive decline from 51.9 fifteen years earlier. The decline in inequality was even more impressive when considering the many factors that were pulling against this decline. In 2015-2016, Lesotho had just experienced one of the worst droughts in its history, particularly hurting the rural poor, which had an adverse impact on inequality. The decrease in the Gini coefficient also occurred after employment opportunities in South Africa diminished, which used to be one of the main sources of income of the poor. Finally, it contrasts with the trend in South Africa, where inequality has increased since 1994. [The author: Daniel Gerszon Mahler]
Arkebe Oqubay reviews Resurgent Asia and Lessons for Africa (AfDB Economic Brief)
The significance of Resurgent Asia lies in its timing, coming as it does 50 years after the publication of Myrdal’s Asian Drama: An Enquiry into the Poverty of Nations (1968) – itself a seminal, if pessimistic, book on Asia’s prospects for development based on a decade of research.
The richness of Resurgent Asia lies in the multidimensional analytical approaches through which the author unravels the continent’s transformation. The analysis is underpinned by theoretical understanding, conceptual clarity, a historical perspective, empirical evidence at the Asian, sub-regional, and country levels, and consideration of the underlying drivers and leading development issues. It also looks forward, reflecting on the future of Asia over the next quarter-century without succumbing to “prophecy”. The book emphasizes two important messages: there is no prescribed path or magic wand, or even an “Asian model” for development; and latecomers evolving on their own paths have the opportunity to catch up. Unlike Myrdal’s Asian Drama, which epitomized the European perspective, Resurgent Asia is written from the Asian perspective. The political economy approach is based on “the premise that economic problems cannot be studied in isolation but must be situated in their wider historical, social, and political context”, without overlooking the role of government and politics and while amplifying the analysis of underlying economic and social factors.
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African finance ministers call for coordinated COVID-19 response to mitigate adverse impact on economies and society (UNECA)
African finance ministers met on 19 March in a virtual conference to exchange ideas on the efforts of their respective governments in dealing with the social and economic impacts of COVID-19. They noted that even before the COVID-19 pandemic, Africa was already experiencing a huge financing gap in funding measures and programmes aimed at realizing SDGs and Agenda 2063 targets and goals. The Ministers emphasized that without coordinated efforts, the COVID-19 pandemic will have major and adverse implications on African economies and the society at large. Original economic forecasts in most economies are on average, being downgraded by 2-3 percentage points for 2020 due to the pandemic. The Ministers agreed on the following (extract):
Africa needs an immediate emergency economic stimulus to the tune of $100bn. As such, the waiver of all interest payments, estimated at $44bn for 2020, and the possible extension of the waiver to the medium term, would provide immediate fiscal space and liquidity to the Governments, in their efforts to respond to the COVID-19 pandemic. The interest payments waiver should include not only interest payments on public debt, but also on sovereign bonds. For fragile states, the ministers agreed on the need to consider waiving principal and interest and encourage the use of existing facilities in the World Bank, IMF, AfDB and other regional institutions.
Documentation prepared for the Virtual Conference on COVID-19 Impact on Africa:
- pdf The case of Eastern Africa (1.41 MB)
- pdf Central Africa (512 KB)
- pdf West Africa: Impediments to harnessing demographic dividend (1.60 MB)
- pdf Southern Africa (407 KB)
- pdf North Africa (258 KB)
Africa’s borders close to fight the spread of COVID-19: selected updates
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Nigeria shuts land borders (Premium Times)
The federal government has announced immediate closure of all its borders to human traffic. The announcement comes as Nigeria recorded 36 cases of COVID-19, including one death. The Secretary to the Government of the Federation, Boss Mustapha, stated this while addressing a news conference on Monday. Mr Mustapha said the new measure is in addition to the closure of the country’s air space from international travels. He said the new decision is part of additional measures taken to further control the spread of the COVID-19 epidemic.
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Ethiopia shuts land borders to fight coronavirus (The Guardian)
Ethiopia on Monday shut its land borders to nearly all human traffic as part of efforts to curb the spread of the coronavirus. Africa’s second-most populous country has so far recorded just 11 infections and no deaths, but officials have struggled in recent days to enforce prevention measures including bans on large gatherings, raising fears the tally could climb. The land border closure was part of a set of new measures announced Monday by Prime Minister Abiy Ahmed’s office. Soldiers will be empowered “to halt the movement of people along all borders, with the exception of incoming essential goods to the country,” a statement said. Security forces will also play a role in enforcing existing measures prohibiting large gatherings and meetings, it added.
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Kenya closes down $12m border post with Uganda as the reality of coronavirus pandemic slowly sinks in (Pulse)
Kenya has effectively closed down two of its busy border posts as it moves to contain the spread of coronavirus. For the next one month, Busia OSBP, which Kenya shares with Uganda and Malaba border will be closed to human traffic. “No Kenyan will be allowed to cross over to Uganda and no Ugandan will be allowed by security officers to come into the country, at least for the next one month,” said County Commissioner Joseph Kanyiri, at a news conference. Only heavy commercial vehicles with a driver and turn-boy will be allowed to cross over to either country. The Ugandan government is also reading from the same script and has already issued a raft of measures to avert the spread of the virus. “Pending the evolving of an EAC Health Response Plan to the Pandemic by the East Africa Ministers of Health, no person, Ugandan or otherwise, will be allowed to enter Uganda by land or water except for drivers and accompanying crews, not exceeding 3 persons, for cargo transport vehicles trailers, lorries and other cargo vehicles. No buses, mini-buses, salon cars or boda-bodas will be allowed in the country,” Museveni said.
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Corona threatens Sh38 billion Kenya/Tanzania trade – PS Desai (The Star)
Activities at Namanga’s OSBP are grinding to a halt as Kenya and Tanzania report increased cases of COVID-19. The busy OSBP that records a high number of human activity on the Kenya and Tanzania sides of the border town witnessed a significant drop to a handful of people on Wednesday evening. Other than human activity, trading between Kenya and Tanzania which averages Sh38 billion has also been affected. This follows Monday’s announcement by President Uhuru Kenyatta that borders with COVID-19 affected countries had been closed. The Principal Secretary in the State Department for East African Community, Kevit Desai said Namanga OSBP is key in the EAC integration, which cannot be fully achieved without the cooperation and collaboration with border agencies and host counties. The Namanga’s OSBP chair and Kenya Revenue Authority manager, Sally Serem, said it now takes three minutes to clear a truck crossing into Kenya. “It used to take us one hour to do so, but with modern equipment, that work now takes three minutes to clear a truck carrying goods to Nairobi,” said Serem. The PS later met with traders in Namanga and to listen to their concerns after the government closed the Kenya/Tanzania border. Most said they are soon closing shop after tourists stopped crossing the border after the coronavirus hit the country.
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Ghana closes all borders after recording 21 COVID-19 case and 1 death (YEN)
President Nana Akufo-Addo has directed that all of Ghana’s borders be closed for two weeks as the nation fights the coronavirus disease. The closure of the borders starts from 12:00am on Sunday, 22 March 2020, after which every human who wants to enter will be quarantined and tested for the virus. “Firstly, all our borders, that is by land, sea, and air will be closed to human traffic for the next two weeks, beginning midnight on Sunday. Anybody who comes into the country before midnight will be mandatorily quarantined and tested for the virus.” However, Akufo-Addo added, “this closure will not affect goods, supplies, and cargo.”
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Togo closes borders over coronavirus (News Ghana)
The Republic of Togo has shut her borders to passengers on the Abidjan-Abuja Corridor to prevent the spread of the COVID-19. The closure of the country’s land borders at midnight of Friday, March 20, came hours after the shutdown of the national Airport in Lome following reports of increasing imported cases of the virus in the country. The closure, which is expected to be in force for two weeks, formed part of measures to contain the COVID-19. The measures include the prohibition of visit by persons to the beach, ban on religious activities and funerals, closure of schools and suspension of gathering of more than 15 people that the Government announced to enable the West African country to contain the pandemic. The Ghana News Agency (GNA) gathered that the number of confirmed cases in Togo, as of Friday evening, shot up to 45 from the earlier eight cases, necessitating government’s measures.
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SA’s closure of borders: Lesotho businesses feel the pinch (City Press)
South Africa’s decision to close some borders with Lesotho is disrupting businesses in the tiny mountain kingdom because the owners have to travel longer distances to bring back goods into the country. South Africa shut down seven borders between neighbours in a bid to control the spread of the Covid-19 coronavirus. Businesspeople in Lesotho this week said the move would cripple the country’s already weak economy. Consumers would feel the pinch as a result. Ntaote Seboka, president of the Lesotho Chamber of Commerce and Industry, said businesspeople would incur more expenses when they import goods from South Africa because they would have to use other borders, which are far. Seboka said Lesotho relied “100% on South Africa” for trading. “It’s true that some borders are still operating, but those that were shut down will affect Lesotho’s economy badly,” he said.
pdf Request for comments on negotiating objectives for a US-Kenya trade agreement (266 KB) (USTR)
The Office of the United States Trade Representative is seeking public comments on a proposed US-Kenya trade agreement, including US interests and priorities, in order to develop US negotiating positions. In particular, the TPSC invites interested parties to comment on issues that USTR should address in the negotiations including, but not limited to, the following:
a. General and product-specific negotiating objectives for the proposed agreement.
b. Relevant barriers to trade in goods and services between the United States and Kenya.
c. Economic costs and benefits to U.S. producers and consumers of removal or reduction of tariffs and non-tariff barriers on articles traded with Kenya.
d. Treatment of specific goods (classified under the Harmonized Tariff Schedule of the United States or HTSUS) under the proposed agreement, including comments on the following:
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Product-specific import or export interests or barriers.
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Experience with particular measures that USTR should address in the negotiations.
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Ways to address export priorities and import sensitivities in the context of the proposed agreement.
e. Fees, charges, and taxes affecting trade in goods and services between the United States and Kenya.
f. Customs and trade facilitation issues, including those related to pre-shipment inspection.
g. Sanitary and phytosanitary measures and technical barriers to trade.
h. Transparency issues.
i. Other measures or practices, including those of third-country entities, which undermine fair market opportunities for U.S. businesses, workers, farmers, and ranchers.
Lawyers fight Kenya-US trade deal at EACJ (The East African)
Lawyers Christopher Ayieko and Emily Osiemo have filed a petition at the East African Court of Justice challenging Kenya’s plans to sign an FTA with the US. They accusing President Uhuru Kenyatta’s administration of violating the EAC Treaty and its protocols. The duo want Kenya’s proposed FTA with the US declared illegal, null and void. “That Kenya, without due regard to the provisions of the EAC Treaty and the protocols for the establishment of the Customs Union and Common Market Protocol, to which it is a party, entered into, negotiated and/or expressed intention to negotiate a bilateral Free Trade Agreement with the United States of America in total violation of the Treaty and the protocols,” the two lawyers argued in their application. They also want Kenya barred from importing American wheat from Idaho, Oregon and Washington States on grounds that the government failed to provide information on the proposed agreement and the adopted phtyosanitary protocol of the certification of wheat grain with the US to the EAC Council on trade relations.
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WTO cancels its ministerial conference: now what? (Borderlex EU)
The organisation may still hold a special ‘General Council’ meeting in Geneva in lieu of the ministerial, but this is likely to be vastly lower profile. While ‘MC12’ was never expected to yield major breakthroughs on the most contentious issues, there was slim hope for an outcome on fisheries subsidies, domestic regulation in services, investment facilitation and electronic commerce. Outcomes on these issues remain legally and technically possible even without a ministerial conference. However, this cancellation unquestionably reduces their likelihood as it removes a natural deadline and further reduces the political imperatives to reach a deal. [The author: Dmitry Grozoubinski]
Global, Africa-regional perspectives on the impact of COVID-19:
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S&P Global: COVID-19 exacerbates Africa’s social and macroeconomic vulnerabilities. Without knowing when the new coronavirus will peak with regards to Africa’s prime tourism season, there is a lot of uncertainty around the potential impact on tourism receipts and remittances, an important component of African sovereigns’ balance of payment. The average contribution of tourism receipts to total exports stood at around 15% at end-2018 for countries that reported these numbers. Moreover, a sizable portion of the tourism and remittances flows to Africa is from Europe, where the disease continues to spread. The impact would depend on the region’s ability to contain the virus, allowing travel and tourism flows to resume for peak season, generally between May and September. For a few African countries, tourism flows contribute to more than 50% of their exports (see chart 2). These countries would consequently have to replace these funds in order to have access to foreign currency resources. Similarly, the sharp decline in economic performance in Europe and elsewhere will also constrain remittances. [Companion analysis: The global recession is here and now]
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China’s coronavirus slowdown: Which African economies will be hit hardest? So what does all of this analysis mean? Should the countries “outside the danger zones” like Kenya and Nigeria stop complaining? No. The trade problems they are experiencing are real, and the UN Economic Commission for Africa has also just released analysis confirming this. However, as middle-income countries, it is a realistic proposition that their own governments can and should shoulder the responsibility of identifying the most vulnerable businesses and people within the countries and use all the domestic tools available to help avoid increases in poverty. In contrast, many of the low-income African countries in the “danger zones” have high percentages of populations in extreme poverty – such as Madagascar with a 75% poverty rate. For these countries, international support from all directions – multilateral organizations such as the World Bank, the African Development Bank, high-income countries such as the G7, as well as China itself – is going to be crucial. The list of 14 least developed countries within our “danger zones” could be countries to prioritize. [The authors: Hannah Ryder, Angela Benefo]
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Africa Confidential: Avoiding the nightmare
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Judd Devermont: COVID-19 is an African political crisis as much as a health and economic emergency
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Country perspectives:
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South Africa: Address by DTIC Minister Ebrahim Patel at the discussion earlier this week at Nedlac (pdf, Agbiz)
Government has done modeling on the various scenarios based on global demand, drawing on local and international sources. These all show that the impact can be serious and that we need to manage that which can influence and shape. Key points to note…:
It will be necessary to work closely together to ensure we maintain confidence across the society and work in a flexible, fast-response manner, to limit the health and economic impact of COVID-19. Within each of the constituencies, appropriate coordinating structures that can be mobilised rapidly, should be set up. In particular, the private medical profession and the pharmaceutical and medical supplier industries will need direct contact with Government on a daily basis.
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COVID19-related export control measures – has South Africa adopted the same yet? (tralac)
The rapid spread of the coronavirus disease (COVID19) has increased demand for and raised concerns about the availability of personal protective equipment (PPE) essential to prevent further spreading of the disease. PPE include face shields, protective spectacles, respiratory masks, protective garments, suits and gloves, among others. Due to the increased demand for PPE and concerns about availability, several countries have imposed temporary export bans and/or restrictions on specific PPE.
Thus far, South Africa has not adopted similar actions; neither are aware of any ongoing process of adopting the measures banning or restricting PPEs exports to any country. The government gazette does not include any such measures. Even the South African Revenue Service has not provided any information related to such measures (as at 19 March 2020). [The author: Talkmore Chidede]
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Kenya: Agriculture sector leaders seek government intervention on horticulture sector crunch
On 16 and 18 March 2020, Agriculture Sector Network (ASNET) led other industry leaders in two consecutive meetings with government Ministries (EAC & Regional Development and Industrialization, Trade and Enterprise Development) on the developing concerns in the horticulture sector following COVID-19 outbreak. The first meeting was with the Principal Secretary, State Department of East African Community, Dr. Kevit Desai and the latter with Cabinet Secretary, Ministry of Industrialization, Trade and Enterprise Development, Ms. Betty Maina at their respective offices. Over the last one week, following travel bans to many destinations in Europe and Asia, the fresh produce subsector had been severely hit with flower exports dropping by 50% due to cancellation of orders for direct sales and collapse of the Amsterdam auction. This means huge losses for flower firms in both the short and long run. Other subsectors of agriculture affected were the farm inputs and cereals. With the sowing season fast approaching, most seed companies had recorded delays in the delivery of various planting seeds either due to the virus outbreak or bureaucracies associated with the PVoC requirements. Leaders agreed that agriculture’s role in the national economy was central and in the wake of this crisis, there is a need to stabilize the sector both in the short-run and long-term.
Some of the proposed short-term mitigation strategies include:
Removal of PVOC requirement for seeds, animal health products and live plants
Fast-tracking payment of VAT refunds owed to agribusiness firms
Zero-rating of VAT on farm inputsGovernment facilitation of free movement of food items and products for both local and export markets in the event of a lockdown.
In the long-term, leaders agreed that there was a need to consider the following mitigation measures:
Expedite the conclusion of EPA with the EU and formalize Kenya-UK trade agreements
Set-up an agriculture and food security recovery fund alongside a recovery strategy
Lobby at EAC to zero-rate farm inputs in the long run to promote sector recovery
Policy reforms on manufacturing, imports, exports and value addition to diversify markets and de-risk the sector post the COVID-19 crisis.
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Looming shutdown of tea auction sends jitters in EAC. The looming shutdown of the Mombasa Tea Auction and suspension of three shipping lines from Mombasa port is beginning to have a grave effect on the economy of the Coast and the greater East African region which depends on this gateway. Already, the coastal economy is reeling from the paralysis in the hospitality sector following the evacuation of tourists and cancellation of hotel bookings as a result of the novel coronavirus. Yesterday, tea traders did not rule out the possibility of suspending the auctions that support a sub-sector which is a means of the livelihood of 600,000 small-scale farmers and employees. A report from the auction reveals that over three million kilogrammes, or 20%, of the volume of tea offered for sale at the Wednesday auction were not sold. Traders in Mombasa warn that if the auction is shut, the multiplier effects on many sectors of the economy like factories, warehousing, transporters and on farmers will be big. “Tea is the most critical agricultural sub-sector and its cultivation and manufacturing spreads across 15 out the country’s 47 counties,” said Dominic Mokua, a tea trade analyst in Mombasa.
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Coronavirus hits tourism industry on Kenya’s coast. Restrictions on foreigners coming into Kenya, imposed to curb the spread of coronavirus, have delivered a big hit to the country’s tourism industry, with some hotels on the coast reporting occupancy rates of well below 10%. A spot check in various hotels around the city of Mombasa on Thursday showed most of the hotels now had an average of 7 per cent occupancy rate or less. Tourism is among Kenya’s leading foreign exchange earners, bringing in 163.56 billion shillings ($1.56 billion)last year. Mombasa depends largely on tourism for its livelihood. “We were at 88%, right now we are at 7%. It does not look as if it is growing, and 7% is because of the cancellations we had this week,” Victor Shitaka, general manager of Flamingo Beach Hotel, told Reuters.
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Coronavirus may impoverish at least 780,000 Ugandans. Mr Matia Kasaija, the Finance minister, told Parliament on Thursday, the low activity in the industry and services sectors will result into job losses, further leading to economic decline and an increase in poverty levels. Additionally, exports are expected to decline in the last four months of the financial year, on account of a sharp reduction in global demand and travel restrictions imposed by Uganda’s key trading partners in the Middle East, European Union and Asia. “The number of people that could be pushed into poverty is estimated at 780,000,” he said. According to the minister, the tourism sector alone will severely be affected by a sharp drop in tourists visiting Uganda following travel restrictions in the USA, Europe and Asia. “Tourism earnings are also expected to decline significantly in the last four months of the financial year,” he said in a government statement to the House. This will also be witnessed with imports likely to be affected by the prevailing restrictions and a reduction in demand within the local economy. Majority of Uganda’s imports come from Asia, particularly China. Overall, imports are expected to decline by 44% in the last four months of this financial year, he said. Kasaija added that the revenue collections will nosedive for the remaining period of the FY2019/20 (March-June) and in FY2020/21.
Discounted ‘Ugandan’ poultry spark protests (Business Daily)
Kenyan poultry farmers have protested an influx of hugely discounted poultry imports including suspected transshipment alleged to be from Uganda. In a letter addressed to Livestock principal secretary Henry Kimutai, the farmers’ lobby is now demanding government protection against the cheap imports. The Kenya Poultry Breeders Association chairman Humphrey Mbugua said the imports threaten to push them out of business. The association called on the government to intervene to avert job and tax revenue losses as well as prevent waning relevance of local food supplies in regional markets. Mr Mbugua cited processed chicken from Uganda that has flooded the market at nearly half price. He said chicken is imported and sold at Sh250 against a local production cost of Sh290 a kilo. He said unscrupulous traders were repackaging poultry products from the US and Turkey to show they originate from Uganda, to take advantage of the fast growing local market.
The World Bank’s Board of Executive Directors has approved $500m ($250m grant and $250m credit) from the International Development Association in continued support of the Government of Ethiopia’s Homegrown Reform Agenda. The Second Ethiopia Growth and Competitiveness Development Policy Operation (DPO) is intended to accelerate Ethiopia’s economic growth and achieve its vision of becoming a lower-middle-income country. This operation is the second of a series of DPOs and provides both financial and technical support to Ethiopia’s economic reforms. The operation is designed to help Ethiopia revitalize the economy by broadening the role of the private sector and attaining a more sustainable development path. Ethiopia, with support from the operation has:
SADC Council of Ministers meeting: Regarding industrialisation, Dr Tax said the secretariat is finalising an assessment on the status of the sector in line with SADC intra- regional trade. “The study is expected to assess progress made and emerging issues, so as to enable the region to take the needed measures and realise its industrialisation aspirations. It will be presented to the ministerial task force on regional integration, and subsequently to Council and Summit in August 2020,” she noted
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The Secretary General of the African Continental Free Trade Area (AfCFTA) Secretariat swears-in
The newly elected Secretary General of the African Continental Free Trade Area (AfCFTA) Secretariat, H.E. Wamkele Mene swore in today as the first ever Secretary General (SG).
The ceremony took place at the African Union Commission headquarters in the presence of H.E. Dr. Moussa Faki Mahamat, Chairperson of the Commission and H.E Edward Xolisa Makaya, the Permanent Representative of South Africa to the African Union and Chairperson of the Permanent Representative Committee (PRC). The Ceremony was also attended by H.E. Mrs. Amma Adoma Twum-Amoah, Ambassador and Permanent Representative of Ghana to the AU, representing the host country of the AfCFTA Secretariat and H.E. Mr. Zakario Maiga, Ambassador and Permanent Representative of Niger, representing the Champion of the AfCFTA process.
The Secretary General will provide leadership and technical support to AfCFTA Secretariat and overall management of the day-to-day functioning of the Secretariat to ensure it achieves its desired mandate. In particular, he will be responsible for the management of the AfCFTA Secretariat, implementation of the AfCFTA Agreement and strategic collaboration; stakeholders’ engagement; and resources mobilization for the implementation of the AfCFTA Agreement.
While welcoming the Meeting, H.E. Edward Xolisa Makaya indicated that “the swearing in of the first Secretary General of the AfCFTA can only be linked to a day in 1993 when the late Peter Sutherland was elected as the first Director-General of the World Trade Organization.” He added: “Mr. Mene is entrusted with a huge responsibility to lead one of the key institutions of the African Union and to guide Africa to realize the Aspiration number one of the Agenda 2063 which talks to the attainment of ‘A prosperous Africa based on inclusive Growth and Sustainable Development’.” H.E Xolisa Makaya, emphasized that the swearing of the SG of the AfCFTA is a milestone in the journey to integrate the continent and an affirmation of Africa’s resolve to advance towards the realization of the objectives of the Abuja Treaty.”
“We put the AfCFTA Secretariat in very capable hands under Secretary General Mene, we are assured of effective implementation of the AfCFTA Agreement,” said H.E. Amb. Albert Muchanga, Commissioner for Trade and Industry.
The Chairperson of the Commission, H.E. Dr. Moussa Faki Mahamat congratulated the SG on his election and underscored the challenges ahead: “I congratulate you on your election. You have been elected on the basis of your experience and skill. The task that awaits you is quite gigantic but exhilarating because you will be working on the most emblematic project in the history of the African Union. The African Free Trade Zone is a necessity for Africa to strengthen its integration.”
In his acceptance speech, H.E Wamkele Mene, Secretary-General of the AfCFTA, pointed out the remarkable progressed that has been achieved largely because of the political will and commitment of the Assembly of Heads of States on providing leadership and ensuring that Africa takes concrete steps towards the creation of an integrated market.
The SG of AfCFTA paid tribute to the President of the Republic of Niger, H.E Mahamadou Issoufou, addressing him as the Champion of the AfCFTA and mentioning “his unwavering and dedicated leadership during the negotiation process of the AfCFTA since 2017.” The SG thanked the Chairperson of the Commission, H.E. Dr. Moussa Faki Mahamat, stating that through his leadership the negotiations were provided with all the necessary resource and political support. He also thanked H.E. Amb. Albert Muchanga, calling him ‘his dear senior brother’, and lauding his wisdom, strength and meaningful support during critical times. He expressed his gratitude to the former Commissioner H.E. Fatima Haram Acyl, stating that she provided strong foundation that was required in the early stages of AfCFTA negotiations.
Mr. Wamkele Mene underscored the importance of the Republic of Ghana, as the forefront of integration in Africa. “Ghana should be at the vanguard of our efforts.” “The AfCFTA is a critical response to Africa’s developmental challenges. It has the potential to enable Africa to significantly boost intra-Africa trade, improve economies of scale and to establish an integrated market.” He added: “It also sends a strong signal to the international investor community that Africa is open for business, based on a single rule-book for trade and investment.”
The Secretary General took the opportunity to address the Coronavirus scourge, “Africa should not despair and fall into despondency-from a trade perspective, we should see this crisis as an opportunity – through the AfCFTA we have an opportunity to reconfigure our supply chains, to reduce reliance on others and to expedite the establishment of regional value chains that will boost intra-Africa trade”.
Before he concluded, the SG indicated that the implementation phase of the AfCFTA coincides with the year of silencing the Guns, providing an opportunity to focus on fast-tracking Africa’s economic development objectives. “Successful implementation of the AfCFTA shall further consolidate the gains that are foreseen in Agenda 2063: The Africa We Want and indeed shall take us a step closer to the Africa we want,” he stated.
This press release was made available to tralac courtesy of the African Union Commission.
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The AfCFTA and the US-Kenya Free Trade Agreement challenge: getting beyond divide-and-rule (Wilson Center’s African Program)
Hardly had South African President Cyril Ramaphosa settled into his chairmanship of the African Union and his compatriot, Wamkele Mene, assumed leadership as Secretary-General of the fledgling and still largely aspirational African Continental Free Trade Area agreement before both began to face a baptism by fire in the form of the United States’ and Kenya’s intent to pursue their own bilateral free trade agreement - a formidable challenge to the AfCFTA. How Ramaphosa as 2020 AU Chair and Mene as AfCFTA’s first SG confront this bilateralist challenge to continental trade integration will determine much about the AfCFTA’s future as Africa’s flagship for achieving global economic power status within the world’s fast-shifting geo-economic/strategic landscape.
How Mene and Ramaphosa, in their respective new positions, will navigate such potential disruption is unclear. One suggestion emanating out of Washington is for the AU, African Development Bank, and Africa Trade Policy Centre (within the UN Economic Commission for Africa) to develop a draft continental trade deal with the US to replace AGOA in 2025 (if not sooner). Another possible approach is for African stakeholders to pro-actively engage the US Congress, particularly the House Africa Subcommittee and the Congressional Black Caucus, to leverage broader congressional support for Africa. Ahead of the 2020 US-Africa trade ministerial to be held in Washington, discussions on the future of the post-AGOA US-Africa partnership should be centered on the promotion of Africa’s regional integration processes and the implementation of the AfCFTA. [The authors: Francis A. Kornegay, Faith Mabera]
USTR’s South Africa GSP review: Google’s submission (InfoJustice)
South Africa has made strong progress in crafting a fair use system that is closely modeled on the US legal framework, including a four-factor test drawn from 17 U.S.C. § 107 that strikes an appropriate balance between the interests of authors, creators, and users. The adoption of fair use in South Africa would clearly benefit US exporters, particularly when the alternative is a legal system that is less consistent with US law. The United States has a strong and innovation-oriented copyright system that protects the legitimate rights of creators, enables new innovation, and generates massive consumer benefits. In addition to other aspects of the US copyright system, the US fair use framework has been critical to the growth of the US digital economy and US digital exporters. One economic study found that American industries that benefit from fair use generate $368bn in US exports each year.
Sustaining the growth of American exports increasingly requires promoting the adoption of fair use-style measures in key foreign markets, such as South Africa. Many of the core technologies that drive American exports of goods and services depend upon fair use or similar rules to function, and exporters of these technologies will be disadvantaged if South Africa does not develop a compatible legal system. It is critical for USTR and the US government to support South Africa in its own efforts to craft a fair use framework, and to provide capacity building assistance where necessary to ensure that these new rules are implemented effectively and consistently with US law. As part of providing support for these efforts, USTR should reject the elements of the GSP petition that complain about South Africa’s efforts to develop a fair use system modeled on U.S. law.
Acetone from Belgium, Korea, and South Africa injures US industry says USITC
The United States International Trade Commission has determined that a US industry is materially injured by reason of imports of acetone from Belgium, Korea, and South Africa that the US Department of Commerce (Commerce) has determined are sold in the United States at less than fair value. As a result of the Commission’s affirmative determinations, Commerce will issue antidumping duty orders on imports of this product from Belgium, Korea, and South Africa. The Commission’s public report, Acetone from Belgium, Korea, and South Africa, will contain the views of the Commission and information developed during the investigations.
Selected postings on the on-going African response to COVID-19:
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African Union, Africa CDC update. As of 17 March 2020, 443 total COVID-19 cases have been reported in 30 African countries. A total of 10 deaths have been reported from four African countries. Africa CDC is working with all affected countries and is mobilizing laboratory, surveillance, and other response support where requested. See Table 1 for the full list of countries in Africa reporting cases and deaths
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South Africa issues regulations to curb stockpiling, price hikes. Government has imposed regulations that will limit unjustified price hikes and product stockpiling, to protect consumers, as the number of COVID-19 pandemic cases rise to 150. The regulations, announced by Trade, Industry and Competition Minister Ebrahim Patel during a press briefing on Thursday, deal with pricing matters during the national disaster. “We are doing this to ensure that we don’t have unjustified price hikes or stockpiling of goods. We are doing this to protect consumers and ensure fairness and social solidarity during this period,” said Patel. On Thursday, government issued directives under the Disaster Management Act and Regulations under both the Competition Act and Consumer Protection Act. According to the regulations, prices may not exceed the increase in the cost of the raw material. The profit levels, he added, should not be hiked higher than in the period just before the period of the COVID-19. “The regulations will cover the full supply chain and will limit price increases of suppliers,” Patel said.
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South Africa: “Unanimous” decision to cut rates by 1% as coronavirus threatens global recession. The South African Reserve Bank has slashed the interest rate by 1%, bringing the country’s prime lending rate to 8.75% from 20 March to stimulate the economy as the coronavirus is threatening to plunge the country deeper into recession. “The decision was unanimous,” said the Bank’s governor, Lesetja Kganyago. The governor said the MPC’s quarterly projection model indicated three repo rate cuts of 25 basis points (0.25%) in the second, third and fourth quarter of 2020. “Monetary policy can ease financial conditions and improve the resilience of households and firms for the short-term, “ added Kganyago, before warning that monetary policy alone cannot keep the economy out of trouble. [Download: Statement of the Monetary Policy Committee]
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Statement by SA’s Minister of Public Works and Infrastructure, Patricia De Lille. Another key intervention by DPWI is the installation of a fence at Beitbridge border between South Africa and Zimbabwe. This is to ensure that no undocumented or infected persons cross into the country and vice-versa. This is in line with one of the measures announced by the President in that South Africa’s borders and ports are to be secured with immediate effect. The President stated that 35 of the 53 land entry points will be closed. This measure will, however, not be effective if the fences at the border are not secure, which in many places, they are not. In terms of Section 27 (2) (l) of the Disaster Management Act, No 57 of 2002, I have invoked emergency procurement procedures in relation to the erection and repairs of the border fences, east and west of the Beitbridge Border Post. This resulted in the following process unfolding in this past week: On Tuesday 17 March the due diligence and site inspections were undertaken between DPWI, Defence and the Defence Force. It was identified that a total of 40 kilometres of 1.8 meter high fence has to be erected, 20 kilometres on either side of the Beitbridge Land Port of Entry. The cost of the project is approximately R37.2m. All 40 kilometres of fence will be finished within one month.
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COMESA Competition Commission warns against fake claims for COVID-19 cures. The COMESA Competition Commission has issued a warning to companies and individuals that are selling products not medically tested and approved, which they claim can treat and prevent the coronavirus. “Such companies and individuals are advised to refrain from such conduct as it is contrary to article 27 of the COMESA Competition regulations. If any company or individuals are found wanting, the commission will not hesitate to apply the provisions of the regulations which include sanctions of up to $300,000,” George Lipimile, the CCC chief executive said in a statement.
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Rwanda: 24 businesses fined over price hikes. The Government said Thursday that it had so far imposed penalties on 24 businesses in the City of Kigali that unlawfully increased prices of certain products. The inspections conducted, as provided by the Competition and Consumer Protection laws, found abnormal increases in the prices of some products, the Ministry said. The measures that were taken include fining businesses and instructing some to “temporarily suspend their business activities.” The Ministry of Trade and Commerce told The New Times that at least 24 retailers and traders who received penalties increased prices of food products and hygiene essentials.
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BMW South Africa is to shut down its Rosslyn manufacturing plant in Pretoria for two weeks because of risks posed by Covid-19 and the resulting impact on demand for new vehicles
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Nigeria: Presidential Economic Council warns of impending recession as they meet Buhari
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Kenya Association of Manufacturers launches online directory for locally manufactured goods, aimed at enhancing supplies and ensuring trade transactions continue uninterrupted in the wake of Coronavirus scourge.
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Global Trade Review: Development banks pledge fresh support as Covid-19 crisis deepens
The Gambia: ECOWAS sensitises stakeholders on brown card insurance (The Point)
Dawda Sarge, the chairman national Bureau of ECOWAS Brown Card, also explained that its main objectives are to enhance the free movement of road users and foster regional integration, whilst guaranteeing a fair and prompt compensation framework to victims of road traffic accident for losses suffered by visiting motorists from other ECOWAS member states. “We operate through a network of 14 bureaus in each of the 14 ECOWAS member states that share land border. Each national bureau performs two main functions; issuing bureau and to investigate and settle claims arising out of road traffic accidents.” Ismaila Saidy, representative of Ministry of Trade, stated that the card plays an important role towards the realisation of the development aspiration of ECOWAS member states and citizens. “The government of The Gambia will continue to support bureau’s programmes and policies to enable them to realise its goals and objectives.”
South Africa set to tackle emerging contaminants (UNEP)
South Africa is partnering with the UNEP Chemicals and Waste Management Programme on an ambitious two-year project to strengthen the country’s institutional approach towards sound management of chemicals and wastes. The project’s first key task will be to conduct a thorough analysis of current chemicals and waste management infrastructure. The focus will be on emerging contaminants and what the country has already accomplished to manage these chemicals. Key gaps and challenges will be identified, particularly within South Africa’s existing regulatory framework and institutional capacity. South Africa will address a lack of capacity at the country’s ports of entry by training customs officials on regulatory enforcement and compliance. By developing a standard operating procedure for border and customs officials across the country’s nine provinces, authorities will be better equipped to detect illegal activities and illicit trade. The training will also include how to sample and how to use portable analytical instruments to better screen imports of chemicals, in particular, leaded paints from entering South African borders.
New shipping line launched between Saudi Arabia, East African countries (Albawaba)
Saudi Ports Authority (Mawani) announced on Wednesday the launch of a new shipping line connecting the Kingdom of Saudi Arabia with East African countries through the shipping line “CMA CGM”, the world’s leading company in shipping services. It is also the first container shipping-line to reach King Fahd Industrial Port in Yanbu, on the Red Sea coast, which contributes to enhancing the movement of exports and imports to and from Yanbu.
Central Bank Digital Currency: Address by IMF deputy managing director Tao Zhang (IMF)
It’s a real pleasure for me to be here for this conference on China’s Trade and Financial Globalization. I want to thank the Institute of Global Affairs of the London School of Economics for the invitation. This afternoon, we’re going to take up a topic that everybody seems to be talking about these days – namely, central bank digital currency (or “CBDC” for short). This is a “widely accessible, digital form of fiat money that can be legal tender,” and a recent BIS survey of central banks shows that 80 percent were exploring CBDC. I’ll start by laying out what I see as some of the main pros and cons of CBDC, as well as their international implications. I’ll say a few words about a few recent pilot experiences with these currencies, and also about some variants and alternatives to CBDCs. Finally, I will close by sharing what the IMF is doing in this area. Digital currencies issued by central banks can bring a number of benefits:
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Trump Administration notifies Congress of intent to negotiate trade agreement with Kenya
At the direction of President Donald J. Trump, United States Trade Representative Robert Lighthizer today (17 March) notified Congress that the Trump Administration will negotiate a trade agreement with Kenya.
“Under President Trump’s leadership, we look forward to negotiating and concluding a comprehensive, high-standard agreement with Kenya that can serve as a model for additional trade agreements across Africa. Kenya is an important regional leader, a strategic partner of the United States, and a commercial hub that can provide substantial opportunities for U.S. trade and investment,” said Ambassador Lighthizer.
In officially notifying Congress, the U.S. Trade Representative is following the procedures set out in the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 – often referred to as Trade Promotion Authority (TPA) – which requires ongoing consultations with Congress. These consultations ensure that USTR develops negotiating positions with the benefit of Congress’ views. USTR will also publish a notice in the Federal Register requesting the public’s input on the direction, focus and content of the trade negotiations.
In accordance with TPA, the U.S. Trade Representative will publish objectives of the negotiations with Kenya at least 30 days before formal trade negotiations begin.
Key Trade and Investment Statistics
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Two-way goods trade between the United States and Kenya: $1.1 billion in 2019, up 4.9% from 2018.
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Top U.S. goods exports to Kenya in 2019: aircraft ($59 million), plastics ($58 million), machinery ($41 million), and cereals (wheat) ($27 million).
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Top U.S. imports from Kenya in 2019: apparel ($454 million), edible fruit & nuts (mostly nuts) ($55 million), titanium ores and concentrates ($52 million), and coffee ($34 million).
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U.S. foreign direct investment (stock) in Kenya stood at $405 million in 2017 (latest data available).
Find out more on AGOA.info.
Fact sheet: U.S.-Kenya Trade and Investment Relationship
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Africa is growing rapidly and presents enormous opportunities for U.S. commercial and economic interests. It is undergoing a transformative change toward greater regional integration, has among the highest growth rates globally, and will account for nearly a fifth of the world’s consumers by 2030.
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Kenya is an important regional leader and strategic partner of the United States. There is enormous potential for us to deepen our economic and commercial ties. It is a gateway to East Africa and beyond, and a major commercial hub that can provide substantial opportunities for U.S. consumers, businesses, farmers, ranchers, and workers.
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A trade agreement between the United States and Kenya will complement Africa’s regional integration efforts, including the landmark African Continental Free Trade Area (AfCFTA). In August 2019, the United States and African Union signed a joint statement concerning the development of the AfCFTA, which reflects our common goal to deepen trade and investment relationships across the continent. The United States pledges its continued support to help the AfCFTA achieve its fullest potential.
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In August 2018, President Donald J. Trump and President Uhuru Kenyatta established the U.S.-Kenya Trade and Investment Working Group to explore ways to deepen the trade and investment ties between the two countries and lay the groundwork for a stronger future trade relationship.
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Under the Working Group, the United States and Kenya initially agreed to work together in the following areas:
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Pursue exploratory talks on a future bilateral trade and investment framework;
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Maximize the remaining years of the African Growth and Opportunity Act (AGOA);
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Strengthen commercial cooperation; and
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Develop short-term solutions to reduce barriers to trade and investment.
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The inaugural meeting of the Trade and Investment Working Group was held in April 2019 in Washington and the second meeting was held in November 2019 in Nairobi.
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The recently elected Secretary General of the AfCFTA Secretariat, Mr Wamkele Mene, will be sworn in tomorrow at the African Union.
Trump Administration notifies Congress of intent to negotiate trade agreement with Kenya (USTR)
At the direction of President Donald J. Trump, United States Trade Representative Robert Lighthizer today notified Congress that the Trump Administration will negotiate a trade agreement with Kenya. “Under President Trump’s leadership, we look forward to negotiating and concluding a comprehensive, high-standard agreement with Kenya that can serve as a model for additional trade agreements across Africa. Kenya is an important regional leader, a strategic partner of the United States, and a commercial hub that can provide substantial opportunities for U.S. trade and investment,” said Ambassador Lighthizer.
In officially notifying Congress, the US Trade Representative is following the procedures set out in the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 – often referred to as Trade Promotion Authority – which requires ongoing consultations with Congress. These consultations ensure that USTR develops negotiating positions with the benefit of Congress’ views. USTR will also publish a notice in the Federal Register requesting the public’s input on the direction, focus and content of the trade negotiations. In accordance with TPA, the U.S. Trade Representative will publish objectives of the negotiations with Kenya at least 30 days before formal trade negotiations begin.
South Africa: Illicit financial flows briefing to the Finance Standing Committee
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pdf Presentation by SA Revenue Service (514 KB) : Focus on concerning compliance areas
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Transfer pricing: per the Davis Tax Committee, between 2008 and 2011, more than R200bn left SA as service charge outflows. Our preliminary review, for 2017 shows approx. R93bn left SA in service charges, including R31bnin interest payments against loans
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Assessed losses: carried forward by large corporates surged from +R130bn (2015) to +R280bn (2017)
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Criminal and illicit economic activities: represents a serious problem to the economy. The prejudice to the fiscus by initial estimates well in excess of R100bn
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Base erosion and profit shifting behaviours are of concern to SARS as it severely erodes the current and future tax base. In addition [through] aggressive transfer pricing practices, profits actually earned through key SA activities, end up in tax and favourable tax jurisdictions (i.e. Switzerland).
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pdf Presentation by the Inter-Agency Working Group on Illicit Financial Flows (593 KB)
Bagamoyo–Horohorolunga-Lunga–Malindi road project: AfDB appraisal report
The East African Coastal Corridor: Malindi – Mombasa – Lunga Lunga/Horohoro and Tanga - Pangani - Bagamoyo Road (454km) is a strategic component of the East African transport corridors network, connecting Kenya and Tanzania. The road project will boost regional integration by reducing transit times, facilitating trade and cross-border movement of people, opening up access to touristic attractions, linking the ports of Dar es Salaam, Tanga and Mombasa, and stimulating the blue economy. It is a spur-link to the Northern Corridor, which is a priority project under PIDA. This project is to be implemented in phases owing to the need for huge investment. The first phase, which is a subject of this report, involves the construction of 175 km road sections: 120.8 km Mkange - Pangani road section in Tanzania and 54 km Mombasa – Kilifi road section in Kenya. The project also includes trade and transport facilitation studies, capacity building, environmental and social monitoring services, and social complementary activities. The total cost of the project is UA 326.62 million. The project is co-financed by the Bank Group (78.7%), European Union (7.5%), the Government of Kenya (8.2%) and Government of Tanzania (5.6%). Parallel financing is also planned with GoT and JICA for Tanga-Pangani Road and Likoni Bridge respectively. The overall project implementation time is five years (2020 – 2025).
The Project will boost regional integration through reduction in transit times, enhanced trade and cross-border movement of people, opening up of access to touristic attractions including beaches and the Saadani National Park, providing a direct link between the ports of Dar es Salaam, Tanga and Mombasa, thereby providing alternatives for traders and enhancing competition and efficiency, boosting rural productivity and stimulating the blue economy. The Project will also reduce congestion, which has been blamed for causing significant tailback into the port of Mombasa. In so doing, the project will have spillover benefits for hinterland countries such as DRC, Burundi, Rwanda, Uganda and South Sudan that depend on Mombasa as a gateway to global markets.
The Lagos Chamber of Commerce and Industry has posted the report of its recent discussion: Land border closure and the Nigerian economy
African, global, responses to the widening impact of COVID-19: selected postings
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WTO DG welcomes G7 leaders’ statement on COVID-19. ”Rarely, if ever, has the world economy seen supply and demand shocks so sudden, so widespread, and so deep,” said the Director-General. “This is inevitably causing major disruptions to trade, as will be visible in our trade forecast for this year, which we are set to release in a few weeks.” Director-General Azevêdo added: “The top priority now must be to protect the health and safety of people at risk from COVID-19. Alongside these measures, maintaining open trade and investment flows will be critical to protect jobs, prevent supply chain breakdown, and ensure that vital products do not become unaffordable for consumers. And once recovery begins to take hold, trade will play a central role in returning economies to full speed. By allowing countries to tap into each other’s growth as it picks up, our economies will recover more quickly than if we try to act alone.”
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IATA media briefing on COVID-19: remarks by Alexandre de Juniac. The measures that governments have introduced to restrict travel are shrinking the size of passenger operations. That is also removing significant cargo capacity from the system - capacity that is vitally needed to help keep supply chains going, including the delivery of critical medicines and medical equipment. That is what was behind our calls yesterday for governments to do all that they can to ensure efficient cargo operations. That includes exempting crew -who do not interact with the public - from quarantine, granting temporary traffic rights where needed, keep air cargo excluded from travel restrictions, and other practical measures to keep cargo moving at this critical time. In these extraordinary times, we have also asked governments to take some extraordinary measures: [IATA chief economist, Brian Pearce: Airlines Liquidity Crisis (pdf)]
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The Rwandan government is currently monitoring the economic implications of the novel coronavirus outbreak to devise appropriate interventions. The monitoring is currently being overseen by a steering committee made up of officials from the public and private sectors. The steering committee, led by the Finance ministry, is assessing economic aspects affected and, to what extent, to formulate and design fiscal and policy interventions. The Minister of Finance and Economic Planning, Uzziel Ndagijimana, told The New Times that findings from the monitoring will pave the way for development and implementation of interventions depending on magnitude of problems. [Rwanda Convention Bureau assesses recovery strategies for conferences]
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The Nigerian government has banned foreign travels for all public officials. This was part of the resolution reached by the Presidential Task Force on COVID-19, chaired by the Secretary to the Government of the Federation, Boss Mustapha. Mr Mustapha briefed journalists on the resolutions of the meeting in Abuja. The taskforce also “strongly discourage(s) travel by Nigerians to affected countries except for essential trips.” The committee also rejected calls by many Nigerians to restrict travels from countries with high cases of coronavirus. Many countries, including African countries like Ghana and South Africa, have already put such restrictions in place to limit the importation of the disease from highly-affected countries. Rather than do that, the presidential committee “encourage(d) everyone returning to Nigeria from any country to self-isolate for 14-days.” [Nigeria, Ghana, Uganda, among African countries that have imposed travel bans, restrictions]
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Kenyan banks offer relief to borrowers as traders warned on hiking costs. In a meeting with President Uhuru Kenyatta at State House on Wednesday, CBK Governor Patrick Njoroge said the deal reached with commercial banks will help reduce the economic pressure that individuals and businesses may encounter due to the coronavirus threat, which has already slowed down trade. Treasury and commercial banks chiefs were also present. Lenders and other financial institutions are expected to restructure their loans with customers in cases where borrowers are not able to honour their obligations on time, Dr Njoroge said. Under the deal, the banks will offer short payment holidays or reschedules on loans payments of up to one year. President Kenyatta said more fiscal measures are expected to be rolled out in the near future to cushion Kenyans against the economic pressure brought about by the outbreak. He also signalled the Kenyan economy is bracing for a wave of job losses as the outbreak disrupts business.
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Price hikes in Africa aggravate the coronavirus crisis. Teddy Kaberuka, an economist based in Kigali, says the price hike is due to a number of reasons. Sellers are trying to profit from the crisis. There is also an increase of demand owing to panic-buying by people who don’t know what tomorrow will bring. “Thirdly, it is connected to the global trade environment. Many commodities come from China and since the Chinese market was heavily affected since the beginning of the year, traders don’t travel to China anymore.” According to Angolan economist Carlos Rosado de Carvalho, in the long run, if the price of oil remains low, the national currency could devalue and the lives of Angolans would become more difficult, even if traders do not raise prices. “A barrel of oil in the neighborhood of $30 means the devaluation of the kwanza, leading to higher prices in Angola, raising inflation which naturally erodes purchasing power. If oil prices are low, this can create serious problems of a social nature,” he told DW.
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Olusegun Obasanjo, Hailemariam Deslagen, Emily van der Merwe, Greg Mills: Success comes from openness, not erecting barriers. We might be experiencing a temporary discontinuation of global integration, prompting us to think carefully about the world we live in and how we limit the spread of negative shocks, similar to what previous financial crises did. However, when this passes, as it surely will, African nations will need to reconsider their position in the world. Hans Rosling, the renowned Swedish academic, spoke of the world’s contemporary pin code being 1114: roughly 1-billion each live in Europe, the Americas and Africa, and 4-billion in Asia, to make a population of 7-billion. By 2050 it will be 1125, with Africa and Asia each adding 1-billion people. Africa has the largest population of young people in the world. While other regions continue to age, Africa will in the coming decades become the world’s energy centre — the human battery, if you like. To take advantage of worldwide shifts in production and economic activity it will have to take deliberate steps to enable its youth to enter the global economy. The temporary Covid-19 bywords might be isolation and insulation; Africa’s future prosperity - indeed, its very stability - depends on deepening global integration. We must not lose sight of this reform imperative.”
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SAA cancels flights amid coronavirus pandemic: 38 are international flights while 124 are regional destinations on the African continent
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How fintech can help in fight against coronavirus spread in Africa
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PIIE’s Chad P. Bown: Trump’s trade policy is hampering the US fight against COVID-19
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Message from tralac on COVID-19
We recognise COVID-19 as a global disaster and are adapting the way we work and how we deliver our work programme, to safeguard the health of our staff, and all with whom we work. We will keep you informed of our work programme and new initiatives, including webinars that we will launch very soon.
Please take note of the following:
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tralac’s office is closed with effect from 17 March – all staff will be working from home. Any queries can be directed to us via email (This email address is being protected from spambots. You need JavaScript enabled to view it.) or phone +27 71 403 6643 (Madeleine) or +27 83 527 0871 (Trudi)
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tralac Annual Conference and other workshops are postponed
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tralac Certificate Course: Trade Law and Policy for Africa’s developments. Module 1 (20-24 April) and Module 2 (11-15 May) will be e-learning modules. Details on Module 3 will be provided in due course.
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Data Science Bootcamp – an e-learning course, will take place on 4-8 May.
President Ramaphosa postpones meeting with African Union commissioners. President Cyril Ramaphosa has, in his capacity as Chair of the African Union, requested a postponement of a meeting - scheduled for Thursday 19 March - with Commissioners of the African Union Commission. The President’s request arises from the priority he is giving to South Africa’s national response to the global COVID-19 pandemic.
Keys to Success: the latest report from the President’s Advisory Council on Doing Business in Africa
The President’s Advisory Council on Doing Business in Africa held its second meeting of the current Council term on 26 February, 2020. Deputy Secretary of Commerce Karen Dunn Kelley, on behalf of Secretary of Commerce Wilbur Ross, chaired the meeting for the US Government, which included representatives from 10 different agencies, plus the newly established Prosper Africa Secretariat. PAC-DBIA Members deliberated and adopted a report, pdf Keys to Success (701 KB) , a compilation of the collective insights from the Council on best practices US companies should consider in order to approach, compete, succeed, and invest in African markets. The Council also adopted a letter to the President that outlines new initiative areas that Members would like to prioritize in their work over the course of the current term.
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In support of the above initiatives, PAC-DBIA makes the following recommendations for the US government to pursue in 2020:
The Administration should organize a PAC-DBIA fact-finding trip to Africa in 2020, led by Secretary of Commerce Wilbur Ross and accompanied by heads of other key agencies critical to the implementation of the Prosper Africa initiative. The trip should be organized in conjunction with the Corporate Council on Africa’s US-Africa Business Summit in Marrakech, Morocco, June 9-12, and include a visit to at least one additional country in the region.
The Administration, with PAC-DBIA participation and support, should host a formal engagement with African heads of state in 2020 and begin making preparations to host a formal US-Africa Heads of State Summit next year. As part of the effort to enhance senior US official engagement with African counterparts, and to inform additional PAC-DBIA recommendations, the Council should undertake a fact-finding trip to Africa before July 2020, when presidential election activities may begin to preclude senior-level Administration participation.
pdf PAC-DBIA: Letter and Recommendations to President Trump - February 2020 (132 KB)
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Once a company has made the decision to engage in any of the markets in Africa, there are a number of key considerations to compete successfully:
Adopt a long-term view. While many of the world’s fastest-growing economies are found on the continent of Africa, companies need to take a long-term approach given the market dynamics of emerging economies. Businesses have been successful when they anticipate the significant investment of time and resources necessary to achieve their business goals. Being committed to the long-term, and managing and sharing that view internally and externally, has helped position companies for better success. Typically, government leaders in Africa appreciate this long-term approach.
As in many parts of the world, doing business in Africa can take time and patience. Projects may require long preparation times, long distance travel, and projects and deals may face delays or unexpected hurdles, such as sudden changes to customs regulations or required import documentation. Persistence and effective followup are key to the success of a deal or project. This is particularly true when working with governments. While timelines can stretch, day-to-day engagement can help to keep things moving.
Align with host government objectives and demand. As with many emerging markets, many governments in Africa play a leading role in setting their national economic development plans, particularly through vision papers, national agendas, and economic growth strategies. These can include everything from strategic industry development, workforce issues, infrastructure programs, financial inclusion, and digital economy strategies. Engaging early to ensure strong relationships with government, not only at leadership but also at working (emerging leader) level, is a key opportunity.
pdf PAC-DBIA: Keys to Success Report - February 2020 (701 KB)
Tunisia is now ready to trade under the COMESA FTA
Tunisia can now export its products to 15 member states of the COMESA Free Trade Area without paying import duties after completing the process of developing and issuing the legal instruments for trading. In a communication by the Tunisia Minister of Trade, Mohamed Msilini, to COMESA Secretary General Chileshe Kapwepwe on 3 March, Tunisia declared it was now ready to implement the COMESA FTA. At the same time, the minister forwarded the legal document published by the Tunisia Customs authority on the implementation of the COMESA FTA as well as the final adopted template of the COMESA Certificate of Origin to be used by the Tunisian operators when exporting to COMESA member States. The Secretariat will subsequently inform the rest of the member States that they can now trade with Tunisia as an FTA member and share with them the legal instrument and sample certificates.
Zimbabwe: Agriculture sector disaster risk assessment (World Bank)
This report presents an assessment of Zimbabwe’s agriculture sector disaster risk and management capacity. The findings indicate that Zimbabwe is highly exposed to agricultural risks and has limited capacity to manage risk at various levels. The report shows that disaster-related shocks along Zimbabwe’s agricultural supply chains directly translate to volatility in agricultural GDP. Such shocks have a substantial impact on economic growth, food security, and fiscal balance. When catastrophic disasters occur, the economy absorbs the shocks, without benefiting from any instruments that transfer the risk to markets and coping ability. The increasing prevalence of ‘shock recovery-shock’ cycles impairs Zimbabwe’s ability to plan and pursue a sustainable development path. [WFP: Many Mozambicans still struggling to get back on their feet, one year after cyclone]
Kenya’s agricultural trade: updates
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Sugar imports up 28% in January on low production. Sugar imports in January grew 28% compared with the similar period last year as the country shipped in more of the sweetener to cover for a growing deficit. According to the Sugar Directorate, imports in January stood at 46,796 tonnes compared with 36,674 in the corresponding period last year. Local production declined by 15% in the review period compared with last year following poor performance in most factories with about four of them remaining shut. The directorate notes that the continued closure of Mumias and Kwale sugar factories have had a huge impact on sugar production.
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Munya, Wekesa differ on maize importation plan. Agriculture Cabinet Secretary Peter Munya and the Strategic Food Reserve chairman Noah Wekesa are headed on a collision path over the imports of maize to bridge an impending shortage. The Noah Wekesa- led fund has requested the Ministry of Agriculture for importation of four million bags of maize to refill the SFR reservoirs and curb a shortage. However, Mr Munya says they will not import maize at the moment until the claims from SFR are verified. “We are not going to import maize until a proper assessment has been done and approved by the Cabinet,” said Mr Munya. Mr Wekesa said the SFR has Sh10 billion in its account, which it can use for the imports once the green light has been issued. The government said a food security committee that moved round the country assessing the stocks indicated that the available stocks can only last up to the end of April, meaning that Kenya will have to seek alternative stock to cushion consumers from high prices of flour.
Related: Africa’s Production and Trade: Agriculture and minerals - a new tralac e-book
Promoting African green business and circular economy for better policies (UNEP)
On the shores of Lake Victoria, just outside Kampala city in Uganda, State Minister for Environment of Uganda Beatrice Anywar addressed over 300 African entrepreneurs and policymakers gathered in February 2020 at the Switch Africa Green regional forum to discuss how to advance green economy in Africa. Echoing the main lesson learned from phase 1 of Switch Africa Green, a project led by UNEP and supported by the EU to assist Africa’s transition into green economy, Anywar said the transition to a green economy requires actions and significant technological, behavioural and systemic change at all levels of the society, including citizens, public and the private sector. “It has been established that more radical innovations come from micro, small and medium enterprises,” Anywar said. “[These enterprises] play a key role in the transition to green economies and sustainable development in general by greening the existing business models and creating new business models that are not only economically profitable but also create environmental and social inclusiveness.”
UNECA: Economic diversification a must, as Central Africa faces double-jeopardy with coronavirus
Speaking to a range of media organizations to unpack the impacts of COVID-19 to Central African economies, Antonio Pedro, Director for ECA’s Office for the subregion said “with the coronavirus, Central African countries face a double jeopardy, underpinned by their excessive dependence on the export of commodities.” “This double jeopardy means that in addition to struggling with the health pandemic with very limited financial resources and fragile health systems, we are also faced with addressing its serious economic effects, which are multiplied because of the structure of our economies leading to a disproportionate exposure to the contagion effects of external shocks.”
In the Central African subregion, he said, countries such as Gabon, Congo, Chad and Equatorial Guinea will be among the hardest-hit in economic terms given the weight of oil exports in total exports. In a scenario of a US$30/barrel this would be a 50% reduction in oil export revenues caused by a demand and price contraction. The latter, a result of downward projections of the rate of growth in Chinese and Western economies and unresolved dispute between Russia and Saudi Arabia on oil production ceilings. Apart from oil, areas to be most affected, according to Economic Affairs Officers Simon Fouda and Issoufou Seidou Sanda, are the supply chain, tourism, remittances from the diaspora and commodities such as coffee, cocoa, rubber and timber. The effect on tourism for instance could cause Sao Tome and Principe to lose 34.2% of its projected GDP in 2020, which is far more significant in terms of loss than what oil-dependent Gabon and Equatorial Guinea would lose in terms of previously projected GDP – that is, 17.6% and 18.5% respectively. [ pdf Economic Impact of the COVID-19 on Africa (1.37 MB) ]
Bloomberg: How coronavirus will dominate African interest-rate decisions
Central bankers in five key sub-Saharan African countries will meet on interest rates in the next ten days as the focus turns to them for measures to shore up their economies that are expected to be hit by the novel coronavirus. Since their monetary policy committees last met, South Africa declared a national state of disaster, Ghana set aside the local-currency equivalent of $100m to combat virus-driven contagion and Kenya’s central bank dropped charges on mobile-money transactions to curb the use of cash for hygiene reasons. Many governments have moved to restrict travel. On Monday, monetary policymakers in Mozambique reduced reserve requirements to boost liquidity, and those in Nigeria announced measures including the extension of a moratorium on principal debt repayments. Still, after the US Federal Reserve cut its main interest rate to near zero, the attention now is on what African central banks, many of whom target inflation and have to prop up volatile currencies, will do with interest rates to help their economies.
IMF: pdf Policy steps to address the Corona crisis (154 KB)
Monitoring, containing and mitigating the effects of the corona virus are top priorities. Timely and decisive actions by health authorities, central banks, fiscal, regulatory and supervisory authorities can help contain the virus outbreak and offset the economic impact of the pandemic. Central banks must support demand and confidence by preventing a tightening of financial conditions, lowering borrowing costs for households and firms, and ensuring market liquidity. Fiscal policy must step up to provide sizable support to the most affected people and firms, including in hard-to-reach informal sectors. Regulatory and supervisory responses must aim to preserve financial stability and banking system soundness while sustaining economic activity.
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Mzukisi Qobo, Mills Soko: The world needs multilateral processes to take on the coronavirus; in SA the government must seize the chance to innovate
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The East African: Egypt to halt flights from Thursday to stem spread of coronavirus
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Xinhua: Businesses in Africa feel impact as Chinese supplies disrupted by COVID-19 epidemic
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Bloomberg: Emerging currencies, including South Africa, face losses of up to 30% in virus sell-down
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Trade Facilitation Coalition for Ghana: Accelerating regional integration through AfCFTA - challenges and opportunities
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Ghana: Coalition of CSOs call for termination of UNIPASS deal
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Customs duty on e-transmissions: India, South Africa make new submission at WTO (Economic Times)
India and South Africa have made a new submission at the WTO against the proposed extension of the moratorium on customs duty on electronic transmissions, raising concerns on the possible inclusion of digitisable goods in its scope that could severely hit developing countries. “Today, members (countries) are waking up to the weighty impact of the moratorium assuming the scope of the moratorium is centred on digitised and digitisable goods. The moratorium will be equivalent to developing countries giving the digitally advanced countries duty-free access to our markets,” said a recent joint communication by India and South Africa to the General Council of the WTO.
India and South Africa argued that in 1998, the digital economy was at its inception, and the world wide web was only starting to be used by the general public. There was no clarity on how the economy would be transformed by digital advancements. “Today, the digital economy is growing rapidly. This is radically changing trade as we knew it. With the advent of new technologies — 3D printing, big data analytics and artificial intelligence — our economy is being further transformed. With regards to traditional trade in goods, 3D printing is expected to be a game changer,” the submission said, adding that the moratorium would lead to loss of use of tariff as a trade policy, which historically has been important for the growth of developing economies.
AfCFTA updates:
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South Africa’s DTI calls for the finalisation of AfCFTA tariff schedules
One of the immediate tasks of the AfCFTA is to ensure that the tariff schedule listing all products covered by the agreement for tariff liberalisation and the indispensable rules of origin are finalised to ensure that the implementation date of 1 July 2020 is met. Therefore, the current administration has a responsibility to work with other AU member states to finalise the detailed modalities in order to establish a platform on which the benefits of the AfCFTA can be derived for both South Africa and its African counterparts. This was said by the Deputy Minister of Trade and Industry, Mr Fikile Majola during an Economic Policy Dialogue to unpack the AfCFTA which took place in Cape Town. He emphasised that there was a need to be ready to take full advantage of the opportunities that will become available in the ongoing implementation of AfCFTA agreement and that should create a more open integrated continental market and enhanced intra-Africa trade.
“While this policy dialogue aims to discuss the AfCFTA with the intention of determining its bearing on South Africa, it is prudent to give a glimpse into the possible trade and economic spin-offs for our country. Though some opinion-makers indicate that the AfCFTA is very ambitious because of the many disparities between the countries development stages, especially relating to trade capabilities, infrastructure and administrative frameworks such as competition and intellectual property policies, however, notwithstanding such deficiencies we are confident that the potential benefits of the AfCFTA will be significant in increasing intra-Africa trade and foreign direct investment,” said Majola.
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Nigeria’s National Action Committee for implementation of the AfCFTA has advertised a range of positions. They include: Trade economist, Senior business analyst, ICT Officer, Communications coordinator.
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A commentary by George Elombi (senior vice president of the African Export-Import Bank): With tariffs gone, the work begins for African trade
COVID-19: updates
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Economic impact of the COVID-19 on Africa. The ECA, on Friday, warned the unfolding coronavirus crisis could seriously dent Africa’s already stagnant growth with oil exporting nations losing up to $65bn in revenues as crude oil prices continue to tumble. Speaking at a Press Conference in Addis Ababa, ECA Executive Secretary, Vera Songwe, said having already strongly hit Africa’s major trading partner, China, COVID-19 was inevitably impacting Africa’s trade. She said although a few COVID-19 cases have been reported in some 15 countries far, the crisis was set to deal African economies a severe blow. “Africa may lose half of its GDP with growth falling from 3.2% to about 2 % due to a number of reasons which include the disruption of global supply chains,” said Ms, Songwe, adding the continent’s interconnectedness to affected economies of the European Union, China and the United States was causing ripple effects. She said the continent would need up to $10.6bn in unanticipated increases in health spending to curtail the virus from spreading, while on the other hand revenue losses could lead to unsustainable debt. COVID-19, Ms. Songwe said, could reduce Nigeria’s total exports of crude oil in 2020 by between $14bn and $19bn. The ECA estimates COVID-19 could lead to Africa’s export revenues from fuels falling at around $101bn in 2020. [ pdf UNECA presentation (1.37 MB) ]
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Mauritius extends travel restrictions to EU, UK, Switzerland and Reunion Island for next two weeks. As from 20 00 GMT, Wednesday 18 March 2020, Mauritius is extending travel restrictions for a period of two weeks on foreign passengers coming from or having transited during the last 14 days in countries of the European Union, including United Kingdom and Switzerland. Also, as from today 20 00 GMT, all foreign passengers coming or transiting from Reunion Island will not be allowed to enter Mauritius for the next two weeks. As for Mauritians coming from these countries, they will be automatically placed in quarantine for a period of two weeks. These preventive measures have been announced, this morning, at a press conference by the Prime Minister, Mr Pravind Kumar Jugnauth, in Port Louis, following a high-level committee on Covid-19. As yet there is no case of Covid-19 in Mauritius. It is to be noted that Mauritius has already taken a number of policy decisions to restrict travel from a number of high risk countries such as Hong Kong, China, South Korea, Italy and Iran. [Related: Financial support plan of Rs 9 billion for economic operators affected by COVID-19]
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South Africa: Statement by President Cyril Ramaphosa on measures to combat COVID-19 epidemic. Any foreign national who has visited high-risk countries in the past 20 days will be denied a visa. South African citizens returning from high-risk countries will be subjected to testing and self-isolation or quarantine on return to South Africa. Travellers from medium-risk countries – such as Portugal, Hong Kong and Singapore – will be required to undergo high intensity screening. All travellers who have entered South Africa from high-risk countries since mid-February will be required to present themselves for testing. We will strengthen surveillance, screening and testing measures at OR Tambo, Cape Town and King Shaka International Airports South Africa has 72 ports of entry in the country which are land, sea and air ports. Of the 53 land ports, 35 will be shut down with effect from Monday 16 March. Two of the 8 sea ports will be closed for passengers and crew changes. [Business Insider: Here are all the border posts South Africa is closing to combat Covid-19]
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Kenya: It won’t be long before Coronavirus shuts down local supply chains. What the policymakers ought to be doing at the moment is not to wait until we are in a crisis. They must have data at their fingertips. The data must include which drugs will be affected most, what is the consumption patterns of, say, essential cancer drugs and those for diabetes, hypertension, etc.? what are the sources, the lead time as well as distribution channels? Without the data, we run the risk of making haphazard decisions that may hurt the people in the long run. The Kenya Pharmaceutical Board Chairman, Dr Jackson Kioko, promised that Kenya would ban exports of drugs due to declining stocks. He did not, however, clarify as to what will trigger a formal ban that other countries have already made. Studies show that the Kenyan pharmaceuticals market is worth Sh100 billion, 80% of which is prescription drugs. Although Kenya exports 50 to the COMESA region and 75% to East African Community, most of these exports are re-exports from India and China. The impact of Kenya banning exports will have far reaching implications in the region. Even if the country doesn’t ban exports, disruptions in China and a ban in India will impact much of Africa. What are the implications of this emerging scenario? What lessons will Africa learn from the potential crisis? [The author: Bitange Ndemo]
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Morocco to create $1bn fund to counter coronavirus outbreak. Morocco’s King Mohammed VI ordered the creation of a 10 billion dirham ($1bn) fund to upgrade health infrastructure and help vulnerable economic sectors in the wake of the coronavirus outbreak, the royal cabinet said on Sunday. The fund will help acquire the necessary health equipment and assist sectors such as tourism as well as help maintain jobs and mitigate the pandemic’s social repercussions, a royal cabinet statement said. Morocco, which confirmed 28 coronavirus cases, suspended all international passenger flights, closed schools and cancelled all events and gatherings of more than 50 people. The global pandemic has taken a toll on Morocco’s tourism sector, a key source of hard currency flow for the country accounting for 10% of its gross domestic product. Morocco attracted 13 million tourists in 2019, up 5.2% from a year earlier. [Related: South Africa’s finance minister says will need to set aside further funding for coronavirus]
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Nigeria: CBN unveils palliative measures to cushion impact of coronavirus on economy. The Governor of the Central Bank of Nigeria, Mr Godwin Emefiele Monday announced some policy measures to douse the adverse economic impacts of the COVID-19 pandemic on the economy. The measures include a moratorium of one year on all principal repayments, effective March 1, 2020 as well as interest rate reduction on all applicable CBN intervention facilities from nine per cent to five per cent per annum for one year effective 1 March 2020. Speaking at a media briefing, the apex bank boss also announced the creation of a N50 billion targeted credit facility through the NIRSAL Microfinance Bank for households and small- and medium-sized enterprises that have been particularly hard hit by Covid-19, including but not limited to hoteliers, airline service providers, health care merchants, among others. [Text of CBN statement: CBN policy measures in response to COVID-19 outbreak and spillovers (pdf)]
South Africa: Poultry industry at odds over big increase in chicken import tariffs (Daily Maverick)
Government’s new chicken regulations mean the import tariffs will be increased to 62% from 37% on frozen bone-in chicken portions (a 25% increase), and to 42% from 12% (a 30% increase) on frozen boneless portions. Unati Speirs, the chairperson of Ebiesa, says: “The country is officially in recession, and consumers and small business owners need all the help they can get. Why ramp up the tariff so substantially? The evidence is clear – these tariff increases will lead to price increases for consumers. It will further damage the growth of many black poultry importers who are trying to build businesses, who already operate at a disadvantage, both to the large poultry importers and the local poultry industry. Many of these businesses are already marginal, and this is likely to mean some of our members simply have to shut up shop, depriving people of jobs and an income.” Ebiesa represents the interests of emerging black importers of chicken to South Africa. These are small South African businesses that each sustain between three and five employees and provide quality poultry to mainly the second economy.
Related: Increased poultry tariffs may result in US backlash. According to Bloomberg, Robert Mearkle, a spokesperson for the US Embassy in Pretoria, said: “The US government is deeply disappointed with South Africa’s decision to raise the already high tariff rates on imported poultry to a substantially higher level.” He said ensuring that US poultry exports continued to have fair access to the South African market was critical.
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UNCTAD-WTO seek executive director for International Trade Centre
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EAC mulls adopting French as an official language
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Nigeria spends $14bn on generators
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COVID-19: trade and REC updates
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South Africa: International Trade Administration Commissioner Meluleki Nzimande told Fin24 that the trade administration body would follow the lead of government and Minister of Trade and Industry Ebrahim Patel when when responding to the coronavirus pandemic. Speaking to reporters during a post-cabinet briefing on Thursday, Minister in the Presidency Jackson Mthembu said a special Cabinet meeting would be held on Sunday to discuss each Cabinet portfolio’s response to coronavirus, which would inform government’s overall intervention. Nzimande said it was too soon to tell the degree of impact, if any at all, that the coronavirus pandemic would have on trade volumes, especially when it came to South African exports to other markets: “ITAC conducts trade monitoring on a long-term basis and since the coronavirus is a recent occurrence, there is currently no trade analysis yet with regards its impact on trade. The impact will however be taken into account in the future when the trade monitoring exercise is undertaken.”
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SADC: Statement following an extra-ordinary meeting of SADC Ministers of Health. The meeting agreed that member states will establish coherent mechanisms of sharing information on issues of transboundary public health concern, and that the Technical Committee for Coordinating and Monitoring the Implementation of the SADC Protocol on Health comprising of directors of public health and directors of medical services be reestablished, and its terms of reference be expanded. The meeting recommended a temporary suspension of SADC regional face-to-face meetings and encourage utilization of modern technology.
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EAC: Due to the outbreak and rapid spread of the novel coronavirus, the East African Community has postponed the 21st EAC Summit until further notice. All other meetings and activities of EAC that require large gatherings have also been suspended.
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WTO’s MC12: Together with the Chair of the General Council, Ambassador David Walker, and in consultation with the delegation of Kazakhstan, DG Azevêdo circulated a note to members saying that “it is our considered view that holding MC12 as previously agreed from 8-11 June will not be feasible”. In light of this development, DG Azevêdo said that he and the chair of the General Council will consult with WTO members, including through a special General Council meeting to be held as soon as conditions permit, on how to proceed with revised arrangements for MC12.
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According to China Ports & Harbours Association, for the week of 2 – 8 March, the container throughput of the eight major container ports increased 9.1%. Among them, the growth rate of Dalian, Tianjin, Qingdao and Guangzhou increased 10%. The overall growth rate of Bohai-rim ports is faster than other coastal ports.
Namibia: Annual trade statistics bulletin 2019 (pdf, NSA)
In 2019, Namibia overall trade (total of exports and imports) amounted to N$203,019 million, slightly lower (0.4%) than 2018 level of N$203,744 million. The exports revenue were N$91,766 million showing a 1.5% decline from last year. While, the imports bill stood at N$111,253 million, an increase by 0.7% from N$110,620 million last year. Subsequently, the decline in exports and the increase in imports resulted in a trade deficit of N$19,487 million, widening from its 2018 level of N$17, 496 million.
Namibia’s trade continues to be highly concentrated to a few countries and commodities. For our export market, the ten leading trade partners (China, South Africa, Botswana, Belgium, Spain, Zambia, UAE, DRC, Italy and the Netherlands) represented 80.7% of total exports. In terms of imports the 10 leading countries (South Africa, Zambia, China, Bulgaria, India, Botswana, USA, Peru, DRC and Chile) constituted 80.5% of total imports. This shows Namibia’s dependence on a few countries for its exports as well as for meeting its import requirements. The commodities traded in 2019 were also concentrated to a few commodities with the 10 leading export commodities accounting for 86.5% of total exports while on the imports side the ten leading commodities represented 65.9% of total imports. Hence there is a need for Namibia to diversify her export basket to mitigate the risks associated with the lack of diversification.
In terms of the mode of transport that our traders used for transporting goods in and out of Namibia, the seaborne was the most preferred mode of transport in 2019 for our exports accounting for 55.7% of total exports ahead of airborne and road bound that represented 23.1% and 22.4%, respectively. On the other hand, on the import side the road bound was the most preferred mode of transport accounting for 63.3% of imports followed by seaborne with 32.4% and airborne with 4.4%.
Nigeria: Foreign trade in goods statistics, Q4 2019 (pdf, NSA)
In Q4 2019, the value of total trade was N10.1trillion, or 10.2% higher than the value recorded in Q3, 2019 and 25.9% higher than in Q4 2018. On an annual basis, the value of total trade in 2019 was recorded at N36,152.1 billion, representing a 14.05% increase over 2018.
Total imports stood at N5,349.63 billion in Q4, 2019 representing an increase of 37.2% over the value recorded in Q3,2019 and 49.34% over the corresponding quarter of 2018. In 2019, total imports grew by 28.8% compared to 2018. The value of imported agricultural goods decreased by 2.8% in Q4, 2019 compared to Q3 but rose 6.6% compared to the corresponding quarter in 2018. The value of agricultural imports in 2019 was 12.7% higher than in 2018.
Total export value was 9.79% lower in value in Q4, 2019 compared to Q3,2019 but 7.06% higher relative to Q4,2018. In 2019, the value of total exports was 3.56% higher than in 2018. Agricultural goods exports grew in value by 61.89% in Q4, 2019 compared to Q3,2019 but decreased by 30.23% when compared with Q4,2018. In 2019, the value of agricultural goods exports fell 10.74% relative to 2018. Manufactured goods exports in Q4,2019 were 48.9% less in value than recorded in Q3,2019 and 573.19% higher than Q4,2018. In 2019, the value of manufactured goods exports was over 200% higher than in 2018. Crude oil exports in Q4,2019 were 3.16% lower than the value in Q3, 2019 and 0.88% lower than Q4,2018. For 2019, the value of oil exports was lower than in 2018 by 3.08%.
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Major export trading partners and percentage share in Q4: India (13.17%), Spain (10.35%), France (7.78%), Netherlands (7.47%), Ghana (7.40%)
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Major import trading partners and percentage share in Q4: India (22.57%), China (20.49%), United States (9.05%), The Netherlands (8.61%), Belgium (5.76%)
Beyond good intentions: The new EU-Africa partnership (ECDPM)
The paper looks at six thematic priorities of the partnership – some longstanding and some more recent: jobs, investment and trade, climate change, digitalisation, peace and security, democracy and human rights, migration and mobility. It examines common and diverging interests, the status of cooperation and the potential way forward across these different areas. Extract (pdf):
While the EU has multiple instruments for facilitating investment in Africa, none of these is truly in partnership with the AU or other African institutions. The EU and AU could consider developing a joint continental investment platform, bringing together the international financial institutions (IFIs) and other policymakers from both the EU and Africa, to design jointly investment programmes.
The EU and many of its member states are worried about Chinese competition in African countries, and seek to lock African markets into the European sphere of influence. However, African countries are eager to increase the volume and quality of trade and investment, including through increased competition between investors where useful.
There are also good prospects for cooperation in the agricultural sector, but perspectives might slightly differ between the EU and Africa, especially without transformation of the traditional investment and trade patterns (mostly foreign direct investment in large scale farming and incentives to export raw commodities from Africa). Crucially, the EU’s External Investment Plan and other EU member states’ bilateral blending initiatives and instruments should be coordinated for the concrete benefit of those who depend on agriculture for their livelihoods.
On trade, there is a strong perspective for cooperation on supporting implementation of the AfCFTA, including through investments in infrastructure and continued support for the practical aspects of implementing it. The prospect of a continent-to-continent trade agreement could also provide the framework to rationalise the EU’s various trade agreements with Africa. While at present African countries have differing interests regarding their trade relationships with Europe and thus have no appetite for a one-size-fits-all approach to a trade agreement with Europe, most African countries do want preferential access to the European market. [The authors: Alfonso Medinilla, Chloe Teevan]
Frank Matseart: Great benefits when Africa becomes a single market (The East African)
Effective implementation of AfCFTA would be transformational. The African Development Bank has forecast that elimination of bilateral tariffs on goods and services would increase intra-African trade by 15 per cent. Yet significant barriers remain beyond tariffs. Without a focus on implementation, we could see a trade agreement that is largely unusable. There is an urgent need to convert the strong political will driving the AfCFTA agenda into the delivery of concrete results. Effective trade facilitation initiatives include enhancing port efficiency (through improved infrastructure and operations); eradicating non-tariff barriers; introducing electronic systems that empower governments to increase collections, reduced clearance costs and improved trade infrastructure at border posts. These interventions tackle not just the symptoms but the root causes, and help countries to develop sustainable channels of growth that increase economic opportunity for citizens by creating jobs, improving transparency, accountability and the capacity for generating revenues. [The author is the TradeMark East Africa CEO]
IOTA Foundation, TradeMark East Africa partner up to improve infrastructure and trade through technology
As strategic partners, we share a common vision for improving trade through technology. The partnership will allow the IF to work with TMEA to spearhead initiatives on using the Tangle to: improve data management and collaboration along trade corridors; explore new ways to ensure digital solutions are inclusive and benefit both large corporations as well as smaller traders; work towards increasing the global competitiveness of East African products whether it is being more cost-effective or providing more transparent supply chains to the end consumer.
Revision to GDP methodology gives boost to Ivory Coast’s reported economy (Reuters)
Ivory Coast has revised how it calculates its gross domestic product, a move that resulted in a big jump in the reported size of its economy. The new methodology for determining GDP, which includes changing the base year for its calculation from 1996 to 2015, was approved in a cabinet meeting on Wednesday. “The economy has changed, we have new industries, new activities,” said Gabriel N’Guessan, head of the national statistics office. “We’re not at war anymore for example.” The economy has been one of the world’s fastest growing since peace returned after civil wars in 2002 and 2010-2011.
Burkina Faso is Ghana’s top food-export destination in West Africa (GhanaWeb)
Data from the Ministry of Food and Agriculture (MOFA) shows that Burkina Faso is Ghana’s top export destination for its foods in the West Africa region. From 2015 to 2019, Ghana has seen an increase in food export with a corresponding revenue of GH¢868.13 million. MoFA has credited the agricultural flagship programme, Planting for Food and Jobs for the rise in food export to neighbouring countries. Burkina Faso topped in the importation of varied foodstuff such as rice, pawpaw, palm fruit, sorghum, cowpea, gari, banana, groundnuts, yellow and white maize, amounting to 92,319.40 tonnes. Cote d’Ivoire came second for mainly importing yam, maize, cowpea, citrus and onions of 14,222.25 tonnes. Mali is the least on the table as it recorded export volume of 1,180.40 tonnes. In all, foodstuff with a volume of 563,859.33 tonnes, were exported to Togo, Cote d’Ivoire, Niger, Mali, Burkina Faso, Benin and Northern Nigeria over the period.
Chad P. Bown, Soumaya Keynes: Why did Trump end the WTO’s Appellate Body? (PIIE)
From 1 January 1995 until 10 December 2019, the world trading system had a relatively reliable referee. If one government reckoned that another had broken the rules, then instead of lashing out immediately on its own, it could complain to the WTO. After a first round of independent arbiters judged on which side was in the right, WTO members could appeal to the Appellate Body, which would deliver the final verdict. But now, because of the Trump administration’s refusal to appoint new members, that Appellate Body is defunct. Without a referee, the danger is that trade disputes blow up into trade wars. Why, then, has the Trump administration done this? One answer came on 11 February 2020, when the Office of the United States Trade Representative published the Report on the Appellate Body of the World Trade Organization. Over 174 pages, the report accused the Appellate Body of engaging in ultra vires actions (acting beyond its powers) and obiter dicta (going on and on). It complained about these adjudicators taking away members’ rights and adding new obligations, in ways that American policymakers had never intended when they signed up to the WTO.
From this body of lawyerly Latin one could easily conclude that the Trump administration is engaged in a philosophical legal debate. Perhaps this is about a clash of legal systems, with the American contract-based approach to international law pitted against a European one, where interpretation—or, in American eyes, misinterpretation—is more acceptable. Dig through the details, though, and it becomes clear that a key area of conflict is much less grandiose. In particular, one collection of judgments by the Appellate Body has caused special angst. In the section of the report titled “Appellate Body Errors in Interpreting WTO Agreements Raise Substantive Concerns and Undermine the WTO,” four of the five alleged errors concerned “trade remedies.” In other words, this is about tariffs. In a new essay, we explain why.
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Uganda to petition EAC on milk export blockade (Daily Monitor)
Uganda and Kenya, have for three months now bickered over milk exports with Kenya announcing last week it would not allow cheap milk from Uganda on its market. Speaking to Daily Monitor at the weekend, Mr Dicksons Kateshumbwa, the Uganda Revenue Authority outgoing commissioner for customs, said Uganda will petition the EAC on the matter during the regional pre-budget meeting scheduled in Arusha, Tanzania next month. “We shall discuss this matter when we go to Arusha for pre-budget meetings next month [April], so [that] we get an official stand,” he said, noting that on average in the last three months, the trade war cost Uganda close to Shs60b in milk exports. Uganda, according to available data, had before the ban, been shipping close to 450,000 litres of milk to Kenya. Kenya has largely remained silent on why it is blocking Uganda’s milk from its market with unofficial comments pointing to the need to protect the country’s milk industry from external competition.
Uganda gold exports more than doubled to $1.2bn last year (Reuters)
Uganda’s gold exports more than doubled in 2019 compared with the previous year, according to data from the central bank seen by Reuters on Wednesday. An official attributed the surge to soaring demand for bullion and larger refining capacity. The east African country shipped $1.25bn worth of gold last year, compared with $514.8m exported in the previous 12 months. Adam Mugume, executive director in charge of research at the central Bank of Uganda, told Reuters the spike was due to a growing international demand for gold and a boost in Uganda’s refining capacity.
South Africa: Record exports, but new unit SA sales decline (IOL)
Vehicle exports were likely to reach a third consecutive record-high in 2020 even as sales of new units locally were likely to decline, the National Association of Automobile Manufacturers of SA (Naamsa) said yesterday. Africa’s largest carmaker is projected to ship 391900 vehicles this year, up from the record 387125 units in 2019, Naamsa said in its 2019 fourth-quarter industry report. The surge in exports would potentially offset the continued decline in domestic new vehicle sales, which were expected to fall to 525500 units from 536611 in 2019. South Africa’s share of global new motor vehicle production in 2019 improved 0.69% from 0.64%, with the country’s ranking remaining at 22nd position in the world. In light commercial vehicle production, South Africa ranked 14th globally, with a market share of 1.26%. Vehicle exports into Europe, and North and South America reflected growth in 2019. Europe accounted for 73.8 of total vehicle exports. “Africa remains a priority focus for the domestic automotive industry and the low motorisation rate on the continent, growing middle-class and the African Continental Free Trade Area should stimulate future demand, albeit from a low base,” Naamsa said.
FairPlay’s Francois Baird: South Africa’s chicken industry rescue plan is already behind schedule (IOL)
The poultry sector master plan is only a few months old, but already it is falling behind schedule. This means continued uncertainty for thousands of chicken industry jobs and further delays in stimulatory measures, which will lead to industry expansion and job creation. It has become all too clear that the tariff-adjustment decision-making process is at best not fit for purpose, at worse not understood to be the priority action that it is by those government agencies tasked with its delivery. Then there’s the implementation of the master plan. Most of the measures set out in the master plan are due to be completed by mid-2020, with a list of important deadlines to be met by the end of this month. These include important food safety measures – a review of regulations to prevent the thawing and refreezing of imported chicken portions because of health risks involved, and a review of packaging and traceability regulations to ensure that all imports can be traced, and that producers meet required standards. Traceability is crucial in the event of product contamination, and was shown in the 2018 listeriosis outbreak. Unfortunately for South African consumers, much of the imported frozen chicken offered for sale in South Africa does not meet the strict labelling requirements which apply to local chicken. These reviews are supposed to be done by the end of March, and there is no indication that progress is being made.
SAFTU’s Zwelinzima Vavi: Government failing to protect chicken industry (Politicsweb)
Imports have taken nearly 30% of the local chicken market, and agricultural experts estimate this could go up to 40% if nothing is done. SAFTU wants a situation where South African workers produce South African chicken for the South African market and then develop a strong export capability. We want a situation where South African jobs are prioritised, and where a threatened local industry is encouraged to expand and create thousands more jobs. That starts with tariffs. Tariffs that have been signed off and promised by the President. This not a capable state, the people and working class is bearing the brunt of this failure by the government. The people and workers are owed an explanation!
SA commercial pig herd now among ‘healthiest in the world’ (Farmer’s Weekly)
With approximately 65% of South Africa’s commercial pig herd now officially registered with the South African Pork Producers’ Organisation’s compartmentalisation system, the local commercial herd is now one of the healthiest in the world. This was according to Johann Kotze, CEO of SAPPO, who explained that compartmentalised piggery operations had essentially “placed themselves under quarantine”. Data presented by SAPPO showed that by 31 January, 104 piggeries and 57 sow units in South Africa were voluntarily participating in the compartmentalised system. Kotze pointed out that with South Africa’s pig production compartmentalisation system, even if a notifiable disease, such as African swine fever or foot-and-mouth disease, broke out elsewhere in the country, compartmentalised piggeries could continue to export pork to international trade partners that recognised the system. “These trade partners understand and trust our compartmentalised system, and they also trust the safety of the pork that comes out of it. Our system is light years ahead of even the US and the EU,” he added.
Services trade growth weakens as COVID-19 crisis hits global economy (WTO)
World services trade growth continued to weaken toward the end of 2019 and into the first quarter of 2020 according to the WTO’s Services Trade Barometer, released on 11 March 2020. The latest reading of 96.8 is down from the 98.4 recorded last September and well below the baseline value of 100 for the index, suggesting below-trend growth in world services trade. The indicator does not yet fully capture the economic impact of the COVID-19 virus and is likely to decline further in the coming months. Among the component indices, the largest declines were in passenger air travel (93.5) and container shipping (94.3), growth of which was already moderating before the COVID-19 outbreak. Both indices cover developments through January and may partly reflect early efforts to halt the spread of the disease, which intensified toward the end of the month. The drop in the container shipping index was driven by lower shipping volumes in Asia while the slowdown in passenger air travel was more broad-based, also covering North America, South America and Europe. The global financial transactions (97.7) and ICT services (97.0) indices also dipped below trend, while the construction index (99.8) appears to have held steady. The global services Purchasing Managers’ Index (96.1) is the most forward-looking barometer component, reflecting expectations that COVID-19 is likely to continue to weigh on services trade in the near-term. An approximate measure of the volume of world services trade shows that year-on-year growth in services trade activity already fell from 4.7% in the first quarter of 2019 to 2.8% in the third quarter.
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Although no country in East Africa has reported coronavirus cases, trade between the region and China is already declining due to the outbreak. Risk expert Caroline Gathii joined CNBC Africa to share more on the impact on the region and ways to deal with it.
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Rolake Akinkugbe-Filani: How coronavirus and the global oil price war can impact Nigeria
Will 2020 be a pivotal year for Africa-EU relations? Not without dialogue and mutual respect (Euronews)
The proposed strategy is meant to help foster a two-way partnership, but it neglects measures to maximise the contributions of Africans to development in Africa. For example, it lacks proposals on fighting racism in Europe, an important obstacle for African diaspora to reach its full potential, and on reducing the cost on the remittances (SDG 10) they send to their countries of origin, an important resource for development. It also lacks proposals for how to change EU citizens’ consumption patterns that are dependent on exploitative practices in Africa (SDG 12), to ensure that EU companies are socially responsible (SDGs 8 and 12), and to promote trade without hindering local agriculture to the benefit of European farmers. The new strategy talks about fighting illicit financial flows, but does not propose a fair tax system in which European companies pay taxes in the African countries where they make their wealth, which could give an important push to those economies. [A note on the authors: Albert Mashika is Secretary General of Caritas Africa; Maria Nyman is Secretary General of Caritas Europa]
Uganda-European Union Business Forum: updates
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Museveni assures EU on business facilitation financing agreements
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EU-Uganda roadmap to improved investment climate (pdf)
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Trade minister Amelia Kyambadde lures EU investors to Uganda
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EU cautions Uganda on corruption
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IMF Executive Board Concludes 2019 Article IV Consultation. Reflecting weak competitiveness, the poor business environment, and social turmoil, GDP is estimated to have contracted by 2½% in 2019. Moreover, the fiscal deficit rose by almost three percentage points to 10.8% of GDP in 2019, reflecting ballooning energy subsidies and weak revenue mobilization. With limited external financing, the fiscal deficit has primarily been financed by monetization, fueling a vicious cycle of inflation, exchange rate depreciation, and deficit expansion. Inflation rose to 60% in November 2019, while the parallel market exchange rate continues to depreciate strongly. The exchange rate system remains highly distorted with multiple currency practices, and the real exchange rate is substantially overvalued. The external position is weak, with the current account deficit standing at 7.8% of GDP in 2019 and low international reserves ($1.4 bn in October 2019, 2 months of imports). Limited forex for fuel imports has led to rationing, persistent shortages, and disruptions to electricity and food supplies. Public and external debt ratios remain high and unsustainable, and stood at 211.7% of GDP and 198.2% of GDP, respectively, in 2019. With large imbalances and loose policies, the outlook is alarming without policy reforms.
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pdf 2019 Article IV Consultation: Staff Report (1.45 MB) . The fiscal position has deteriorated because of ballooning fuel subsidies and weak revenue mobilization (See Tables 1-7; Figures 2-5). Revenues and grants increased by 1¾ percentage points to almost 9% of GDP in 2018 as exchange rate devaluation boosted customs duty and VAT on imports, but remained among the lowest in the world. In 2019, however, they fell to 7¾% of GDP as continued overvaluation of the official and customs duty exchange rates depressed foreign-currency-denominated and import-related revenues.
Total expenditure (including off-budget implicit fuel subsidies) increased by 3 percentage points to 16¾% of GDP in 2018, with ballooning subsidies partly offset by other expenditure tightening. Expenditure increased further by 2 percentage points to 18¾% of GDP in 2019 largely due to a continued increase of fuel subsidies.
In 2018, the wage bill fell by 1¼ percent of GDP, as public workers did not receive a wage increase despite high inflation. There were also moderate cuts to expenditure on goods and services, wheat subsidies, and transfers to state governments. In 2019, the wage bill is estimated to have risen by ½ percent of GDP on account of higher wages for some segments of the civil service and the security forces. There were also modest cuts to expenditure on goods and services, and transfers to state governments. Capital expenditure fell by ½ percent of GDP to nearly zero. [ pdf Companion Selected Issues report (566 KB) ]
Ethiopia to lose $1bn in case it exits Somaliland’s Berbera port (EA Business Week)
Ethiopia stands to lose close to $1bn should the country move ahead and halt its new development and partnership with Somaliland over the Port of Berbera. There have been unconfirmed reports in the Ethiopian and Somaliland media that the Horn of Africa nation is considering developing a port in Sudan that will be an optional sea outlet. While the reports are not conclusive, Ethiopia Minister for Transport Dagmawit Moges said that owning a port is part of the Ten Years National Logistics Strategy issued a few months ago. “We are interested to develop ports and it is one of the interventions in the logistics strategy, but it should be determined by the deal with countries,” said Moges. This basically means Ethiopia still consider Berbera Port strategic to their trade and security partnership with Somaliland. Ethiopia owns 19% stake in the Port of Berbera which it uses to export Khat, Cement and fruits to Somaliland earning close to a billion dollars annually.
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Paul Heald: Why South Africa should resist US pressure to extend copyright terms (InfoJustice)
The current term of copyright in South Africa is life-of-the-author plus 50 years. But the US is pressuring South Africa to extend the term to life-plus-70. Since the US is a net exporter of copyrighted media, like songs, books, and movies, US copyrights earn billions in revenue yearly. The US wants to prolong this trade imbalance as long as possible and deny foreigners free access to older US works. Research I have done shows that caving in to this demand would be bad for South African consumers. This is because copyright term extensions prevent works from entering the public domain and being republished for the public benefit. The negative effect on the availability of titles is palpable and dramatic. Just as important, keeping books under copyright imposes a direct cost on the public in terms of higher prices. South Africa is poised to adopt a Copyright Amendment Bill that aims to modernise its 1978 Copyright Act and ensure protection of the creative industries. But the proposed amendments are fiercely contested and the US has been adding to the pressure. A change to extend the terms of copyright would benefit the US, which exports far more copyrighted works to South Africa than it imports.
Joint Communication towards a Comprehensive Strategy with Africa: updates
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Remarks by High Representative/Vice-President, Josep Borrell, and Commissioner for International Partnerships, Jutta Urpilainen. So, why a new strategy, some might ask. It is a fair and good question. But so is the answer. This Strategy with Africa is a Strategy of the new geopolitical Commission. What do I mean with this? We live in a multipolar world, where we face increasing competition. At the same time, the realities are shifting in Africa. Economy is booming and the young population is growing rapidly. The old narrative and perception of Africa as a continent of instability and threats is challenged by huge emerging opportunities. Then there are the big global mega trends. Climate change and digitalisation already change the way we live. They are transforming our economies and societies. At the same time, the multilateral international order is under threat. When we believe in cooperation, some push for unilateralism.
These realities provide us both with a challenge and an opportunity. We want Europe to be stronger in the world. We can achieve our goals together with our partners. Not everything has to change. The new comprehensive Strategy builds on the priorities agreed at Abidjan in 2017 and the successful work of the Africa-Europe Alliance for Sustainable Investment and Jobs and its inclusive Task Forces. Now it is time to scale up and take the partnership to a new level. Therefore, what now needs to change is how the geopolitical Commission engages with Africa. I see our new approach built on four pillars:
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Questions and Answers: Towards a Comprehensive Strategy with Africa. The EU is Africa’s largest trade and investment partner, and the main supporter of the AfCFTA with €72.5m mobilised by the end of 2020. In 2018, total trade in goods between the 27 EU member states and Africa was worth €235bn – 32% of Africa’s total. This compares to €125bn for China (17%) and €46bn for the US (6%). In 2017, the 27 EU Member States had foreign direct investment stock in Africa worth €222bn – more than five times either the US (€42bn) or China (€38bn).
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We, the JAES Civil Society Steering Group, welcome the efforts of the EU to strengthen its partnership with Africa. We call on the EC and EEAS to ensure that they maintain a balanced approach and put people at the center by going beyond the five priorities. We believe that the involvement of African and European civil society in the definition and implementation of the strategy is crucial to make the entire process more democratic, transparent and accountable. We also welcome the recognition of the potential and key role of young people and women in the realisation of peace, sustainable and inclusive development. We look forward to an EU-AU Summit that gives civil society a real space to participate and to a strategy that truly responds to people, especially girls and young women’s aspirations, created through an open and inclusive process on both continents.
A suite of postings on the economic and trade impact of the coronavirus:
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UNCTAD: Can policymakers avert a trillion-dollar crisis?
The spread of the coronavirus is first and foremost a public health emergency, but it’s also a significant economic threat. The COVID-19 shock will cause a recession in some countries and depress global annual growth this year to below 2.5%, the recessionary threshold for the world economy. Even if the worst is avoided, the hit to global income, compared with what forecasters had been projecting for 2020, will be capped at around the trillion-dollar mark. But could it be worse? UNCTAD published an analysis (pdf) on 9 March that suggests why this may be the case. Losses of consumer and investor confidence are the most immediate signs of spreading contagion, the analysis says. However, a combination of asset price deflation, weaker aggregate demand, heightened debt distress and a worsening income distribution could trigger a more vicious downward spiral. Widespread insolvency and possibly another “Minsky moment”, a sudden, big collapse of asset values which would mark the end of the growth phase of this cycle cannot be ruled out. “Back in September we were anxiously scanning the horizon for possible shocks given the financial fragilities left unaddressed since the 2008 crisis and the persistent weakness in demand,” said Richard Kozul-Wright, UNCTAD’s director of globalization and development strategies. “No one saw this coming – but the bigger story is a decade of debt, delusion and policy drift.”
Extract (pdf): Figure 3 below maps out data for the trade openness of economies to China (exports plus imports to GDP) representing a proxy for the depth and extent of real ties to China, together with debt servicing on publicly guaranteed debt to government revenue as sources of vulnerability facing developing countries since the viral outbreak. We use trade in goods (both exports and imports) in an attempt not only to capture the importance of China’s share of export demand but also the role of imports affecting global values chains. This data, for some 117 developing countries, shows that around a fifth of these economies are highly vulnerable to direct impacts of the COVID-19 shock due to a combination of deteriorating debt sustainability (captured by a growing share of public revenues going to service public debt obligations) with high exposure of their economies to trade and wider economic relations with China, including Mongolia, Angola, Gabon, Philippines, Mozambique, Vietnam, Cambodia and Zambia. These developing economies are closely linked to the Chinese economy through their participation in Chinese-led global value chains and also are reliant on commodity exports to China. In addition, China has become an important source of financing for developing countries, with loans to emerging market and frontier economies increasing 10-fold (from $40bn in 2008 to $400bn in 2017). For countries like Zambia, Mongolia, Ecuador, Venezuela, Angola, Kenya, Pakistan, Sri Lanka, Bolivia and Jamaica, China is now the largest official creditor.
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UNCTAD: Coronavirus could shrink global FDI by 5% to 15%
The coronavirus (COVID-19) outbreak could cause global FDI to shrink by 5%-15%, according to an UNCTAD report (pdf) published on 8 March. The UN trade body had projected earlier a stable level of global FDI inflows in 2020-2021 with a potential increase of 5%. Now it warns that flows may hit their lowest levels since the 2008-2009 financial crisis, should the epidemic continue throughout the year. COVID-19’s negative impact on investments will be felt strongest in the automotive, airlines and energy industries, the report says. Investment Trends Monitor (pdf): Table 2 also lists the share of the reinvested earnings component of FDI for each region, indicative of the potential indirect effect that earnings losses could have on FDI. For example, the average -9% earnings losses projected to date for 2020 could affect 52% of FDI flows (this assumes losses are spread uniformly across MNE operations; in reality it is more likely earnings losses would be concentrated in foreign affiliates in affected areas, further augmenting the impact on reinvested earnings).
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Ronak Gopaldas: Africa should make sure it ends up on the right side of coronavirus geopolitics (Business Day)
Of course, there are a couple of important caveats to these scenarios. The first is premised on coronavirus’s longevity and the ensuing contagion, which remain uncertain. Second, how severely the virus affects the Chinese economy remains to be seen. If China is able to mitigate the disruption quickly (as it was able to do with the SARS epidemic), these outcomes could become tail risks and nothing more. Given the authoritarian nature of its political system, China will be able to impose draconian crisis management measures in a manner that many Western democracies cannot. This is likely to help soften the impact of the outbreak. There is a great deal of speculation on how this will play out. African countries should be attuned to the dynamic nature of the crisis and its unplanned consequences. It would be negligent not to consider the possibility of a global geostrategic reset and its cascading consequences. Current developments may serve as the perfect catalyst for a rethink of the manner in which Africa engages with foreign partners. The continent’s policymakers will need to guard against exploitation in the midst of such a crisis and be alert to the risks associated with new partners bearing gifts and promises. [Uganda: Imports from China drop]
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IMF’s Gita Gopinath: Limiting the economic fallout of the coronavirus with large targeted policies (IMF)
Central banks should be ready to provide ample liquidity to banks and nonbank finance companies, particularly to those lending to small- and medium-sized enterprises, which may be less prepared to withstand a sharp disruption. Governments could offer temporary and targeted credit guarantees for the near-term liquidity needs of these firms. For example, Korea has expanded lending for business operations and loan guarantees for affected small- and medium-sized enterprises. Financial market regulators and supervisors could also encourage, on a temporary and time-bound basis, extensions of loan maturities.
Considering the epidemic’s broad reach across many countries, the extensive cross-border economic linkages, as well as the large confidence effects impacting economic activity and financial and commodity markets, the argument for a coordinated, international response is clear. The international community must help countries with limited health capacity avert a humanitarian disaster. The IMF stands ready to support vulnerable countries with different lending facilities, including through rapid-disbursing emergency financing, which could amount up to $50 billion for low-income and emerging market countries.
Mozambique: National Financial Inclusion Strategy (2016-2022) mid-term review (World Bank)
Financial inclusion is a key enabler to reducing poverty and increasing shared prosperity. In Mozambique, despite considerable efforts to promote financial inclusion, less than half the population in 2016 had access to a bank account, mobile money account. In response, the government of Mozambique (GOM) launched an ambitious national financial inclusion strategy (NFIS) in July 2016. The NFIS implementation period is from 2016 to 2022, with an initial phase to 2018. By 2018, the percent of population with access to a bank account had declined slightly but was compensated by growth in mobile money accounts. A mid-term review (MTR) of the NFIS was undertaken to assess progress at the end of the first phase, recommend requisite course corrections, and establish priorities for the second phase. This report includes recommendations for priority actions for second phase of the strategy’s implementation and monitoring of progress. It is based on an examination of relevant written documentation and discussions with stakeholders during two visits to Mozambique between 2018 and 2019. [African Business Magazine: Towards an economy transformed by gas]
Kenya: We shall not allow in cheap Ugandan milk (Monitor)
Kenya has said it will not allow cheap milk imports to flood its market. This was said by the country’s Agriculture Cabinet Secretary Peter Munya, who also noted they had come up with a raft of reforms to protect local farmers as well as revive Kenya’s dairy sector. Kenya has since December had run-ins with milk exporters, particularly from Uganda, locking out dairy products from its market. At least, Ugandan milk exporters including Pearl Dairy, which produces Lato Milk and Lakeside Dairy, which manufactures Top Dairy milk, have been locked out of the Kenyan market. No official explanation has been provided and a February protest note, which had given Kenya an ultimatum of 15 days within which it had to explain its hostility specifically against Lato Milk it yet to be responded to. At the close of last week, Mr Munya told Daily Nation that importation of cheap milk had disadvantaged Kenyan farmers thus government would implement a raft of measures to stop its entry as well as punish those found importing it.
India’s External Affairs minister S. Jaishankar: Political correctness cannot justify trade deals (Mint)
“Obviously, in a globalised world, no economy can be an island to itself. But the exercise of engagement and its terms must be objectively addressed. Trade outcomes must be primarily justified by trade calculations not by political correctness. Their gains must be visible, probable, and practical and not just hypothetical scenarios,” Jaishankar said while addressing the Economic Times Global Business Summit in the national capital. “The debate between opportunities and risks is consequently both active and open. At stake is the livelihood of many, a concern underlined by the experience of large (trade) deficits,” the minister said. “Above all, they must promote manufacturing as the mainstay of the economy, not undermine it. There are strong strategic aspects to such negotiations,” which is why India has taken “a whole of” consultative approach to the process, he said. “I can’t have a strategy for India that is bad for Indian business, then I am hurting my national strategy,” the minister said later in a question and answer session. “Indian business is at the heart of India,” he added.
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EU paves the way for a stronger, more ambitious partnership with Africa
The European Commission and the High Representative for Foreign Affairs and Security Policy today proposed the basis for a new strategy with Africa.
The communication sets out proposals to intensify cooperation through partnerships in five key areas: green transition; digital transformation; sustainable growth and jobs; peace and governance; and migration and mobility. Based on this document, Europe will engage discussions with African partners towards a new joint strategy to be endorsed at the European Union – African Union Summit in October 2020.
European Commission President, Ursula von der Leyen, said: “Today's Strategy with Africa is the roadmap to move forward and bring our partnership to the next level. Africa is the European Union's natural partner and neighbour. Together we can build a more prosperous, more peaceful and more sustainable future for all.”
High Representative for Foreign Affairs and Security Policy/Vice-President of the European Commission for a stronger Europe in the World, Josep Borrell, said: “A part of Europe's future is at stake in Africa. To face our common challenges, we need a strong Africa, and Africa needs a strong Europe. There is everything to gain from reinforcing our already very strong partnership in areas such as peace and stability, poverty and inequalities, terrorism and extremism. Both our continents need each other to strengthen themselves, to strengthen each other, and to achieve a common ambition: a better world based on a rules-based international order.”
The European Commissioner for International Partnerships, Jutta Urpilainen, commented: “With the proposed five partnerships, built around our shared interests and values, Africa and Europe will together lead on the green and digital transformation, as well as promote sustainable investment and jobs. My key priority now is to ensure that the Strategy with Africa is owned by the youth and women, as it responds to their aspirations.”
The renewed cooperation on the partnerships around the five areas proposed today will build on an ongoing dialogue with African partners, which will be taken forward ahead of the next EU-AU Summit in Brussels in October 2020 in view of defining joint strategic priorities for the years to come.
The proposals set out build on a growing momentum in EU-Africa relations. With the 6th Summit between the African Union and the EU and the conclusion of the negotiations of the new partnership agreement between the EU and the African, Caribbean and Pacific group of States, 2020 will be a pivotal year in living up to our ambition of an even stronger partnership with Africa, our natural partner.
The partnership should be based on clear understanding of our respective and mutual interests and responsibilities.
The Communication proposes that the EU partners with Africa on the following actions:
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Maximise the benefits of the green transition and minimise threats to the environment in full compliance with the Paris Agreement
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Boost the continent's digital transformation
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Substantially increase environmentally, socially and financially sustainable investments that are resilient to the impacts of climate change; promote investment opportunities by scaling up the use of innovative financing mechanisms and boost regional and continental economic integration, particularly through the African Continental Free Trade Agreement
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Attract investors by supporting African states in adopting policies and regulatory reforms that improve the business environment and investment climate, including a level-playing field for business
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Rapidly enhance learning, knowledge and skills, research and innovation capacities, particularly for women and youth, protecting and improving social rights, and eradicating child labour
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Adapt and deepen EU support to African peace efforts through a more structured and strategic form of cooperation, with a particular focus on regions where vulnerabilities are the highest
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Integrating good governance, democracy, human rights, the rule of law and gender equality in action and cooperation
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Secure resilience by linking humanitarian, development, peace and security interventions at all stages of the cycle of conflicts and crises
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Ensure balanced, coherent and comprehensive partnerships on migration and mobility
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Strengthen the international rules-based order and the multilateral system, with the United Nations at its core
Background
On 27 February 2020, the European Commission and African Union Commission met for the pdf 10th ‘Commission to Commission' meeting in Addis Ababa (158 KB) , where the future cooperation in the fields set out above was discussed. In May, the AU-EU Ministerial Meeting of Ministers for Foreign Affairs of both continents will be another important opportunity to consult African partners.
The proposals also build on the commitments taken at the 5th African Union-European Union Summit in Abidjan. Progress achieved since then includes the launch in 2018 of the Africa-Europe Alliance for Sustainable Investment and Jobs, calling for strengthened economic and trade relations, through sustainable investment and job creation. The conclusion of the AU-EU Memorandum of Understanding in 2018 on Peace, Security and Governance was also an important landmark, deepening cooperation in these areas
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Underway in Addis Ababa: ETTG-UNDP agenda-setting event on the EU-AU Partnership
Selected EAC trade and development policy events
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Regional consultative meeting on the 6th Development Strategy 2021/2022 - 2025/2026 (11 March, Arusha), in preparation for national consultations (12-31 March)
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Study on the effectiveness and efficiency of the East African Customs Union (starting 11 March)
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7th Meeting of the Ad hoc EAC Competition Authority Commissioners (12-14 March, Nairobi)
Trade Policy Reviews scheduled this month at the WTO: Australia (11 & 13 March), Japan (18 & 20 March), Zimbabwe (25 & 27 March)
Towards a comprehensive strategy with Africa (The European Commission)
To strengthen the EU’s strategic alliance with Africa, the European Commission and the High Representative of the Union are proposing to engage discussions with African partners in view of jointly defining at the upcoming EU-AU Summit a new comprehensive EU strategy with Africa that could be built on five partnerships:
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A partnership for green transition and energy access;
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A partnership for digital transformation;
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A partnership for sustainable growth and jobs;
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A partnership for peace and governance; and
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A partnership on migration and mobility.
This new strategy and these partnerships are in line with the common priorities set by the EU and the African Union at the 2017 Summit in Abidjan. It takes inspiration notably from the very fruitful discussions between the European Commission and the African Union Commission, which took place in Addis Ababa on 27 February 2020 and reflects the EU’s proposals for the ongoing exchanges with African partners in view of defining a joint partnership agenda at the upcoming EU-AU Summit in October 2020. EU-Africa engagement will continue at bilateral, regional and continental level.
Extract: III. Partners for sustainable growth and jobs: Regional and continental economic integration
Proposed Action 3: Partner with Africa to substantially increase environmentally, socially and financially sustainable investments that are resilient to the impacts of climate change; to promote investment opportunities by scaling up the use of innovative financing mechanisms; and to boost regional and continental economic integration, particularly through the AfCFTA.
The latter will be done by making political, technical and financial support for the African Continental Free Trade Agreement (for which EU support already grew from EUR 12.5 million in 2014-2017 to EUR 60 million in 2018-2020) a top priority. We are ready to share our customs union and single market experience. Cooperation on the strategic corridors that facilitate intra-African and Africa-Europe trade and investment, and improve sustainable, efficient, and safe connectivity between both continents, will also be enhanced by the long-term prospect of creating a comprehensive continent-to-continent free-trade area. EU business associations can play an important role in the Business Forum organised in the margins of the upcoming AU-EU Summit. Cooperation and dialogue, business partnerships along critical value chains, as well as the deepening of Economic Partnership Agreements, and other EU trade agreements with African partner countries, are the tools through which this can be achieved.
Proposed Action 4: Partner with Africa to attract investors by supporting African states in adopting policies and regulatory reforms that improve the business environment and investment climate, including a level-playing field for business.
With this in mind, it is proposed that the EU develops more ambitious arrangements to facilitate, attract and support investment in Africa. The EU should further develop the use of platforms such as the Sustainable Business for Africa Platform and the International Platform on Sustainable Finance. In parallel, it is important to promote regulatory reforms and to strengthen the institutional capacity of public authorities, business organisations and entrepreneurs, including social entrepreneurs, while reinforcing capacity-building related to SME access to markets and finance. In this respect, European business organisations should continue to support entrepreneurship in Africa. The EU should also encourage regulatory dialogue with public administrations to exchange good practices. Budget support dialogues should continue to be a key instrument in promoting reforms. Finally, trade agreements and investment provisions to attract, facilitate and support sustainable investment will also contribute to improving the business climate.
pdf Towards a comprehensive Strategy with Africa: Joint Communication, 9 March 2020 (656 KB)
pdf Factsheet: Towards a comprehensive strategy with Africa (1.29 MB)
International Women’s Day: selected commentaries, messages
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AUC chairperson Mousa Faki Mahamat: In addition, in collaboration with the UNECA, the commission launched the African Women Leadership Fund with the aim of mobilizing resources from the global private sector to fund women’s initiatives and promote an enabling environment for the increased participation of women across the continent. Furthermore, the AfCFTA promises to benefit women in business, especially women cross-border traders across the continent. Indeed, Africa is on a good trajectory to provide expanded opportunities for women to realize their financial and economic freedom.
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WEF’s Elsie S. Kanza: How to empower women entrepreneurs to grow Africa. Yet most women businesses remain stuck at the micro level, unable to grow due to a range of factors. The report, Profiting from Parity: Unlocking the Potential of Women’s Businesses in Africa 2019, finds that barriers to growth and profitability include social norms, networks and strategic business decisions. In the context of the fourth industrial revolution, it is also alarming to note that the technology gender gap is widening, further crippling the growth potential of women entrepreneurs. Also worrying is the growing digital divide – women are being left behind in the era of the fourth industrial revolution. Still, it feels like a never-ending climb of Mount Kilimanjaro, Africa’s highest peak. This must change.
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WTO director general Roberto Azevêdo: Members have also started to integrate gender into their WTO work. Last year, 10 out of the 12 members who went through the Trade Policy Review process voluntarily included information on their gender-responsive trade policies. This is a 66% increase from the year before. In line with requests from members, we have also incorporated trade and gender into our Technical Assistance Plan. Last March the WTO launched its first training module on trade and gender. Since then, 13 courses have been provided to government officials, including three at the regional level. WTO members’ demand for these courses is growing, so we will continue our efforts on this front. By 2021, we plan to launch an e-learning module on this issue, which will be available to all WTO stakeholders. The Buenos Aires Declaration has been a catalyst for all this work. As a next step, the Declaration’s proponents are currently working on a report on its implementation to be presented to ministers at our 12th Ministerial Conference in Nur-Sultan, Kazakhstan. They are looking at ways to take this work forward, including by making the discussion more structured and prominent.
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UN Deputy Secretary-General Amina J. Mohammed: ”We cannot achieve the Sustainable Development Goals, the global agenda for people, planet and prosperity, if we do not bring along half our population”, Ms Mohammed said at a press conference following the launch of the UN-EU’s Spotlight Initiative. “We cannot say we have achieved peace if half our communities live in fear, insecurity, and without dignity.”
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B20 Saudi Arabia profiles priorities for the Women in Business Action Council. The Council, the first of its kind for the B20, will ensure that issues surrounding gender diversity in business and economic empowerment of women are placed at the center of Saudi Arabia’s B20’s presidency. B20 Saudi Arabia has established six taskforces that concentrate on specific economic priority areas, with 656 taskforce members across all G20 members. The Women in Business Action Council sits across all six taskforces, a structural change from past B20 presidencies. Women make up 43% of B20 Taskforce and Action Council Chairs, the highest proportion in the group’s history. Furthermore, the B20 Presidency established criteria for Committee Membership that has resulted in 33% of participants being women, the highest per centage among some of the most recent B20 Presidencies (Turkey 23% in 2015, Germany 22% in 2017, Argentina 28% in 2018). “The Women in Business Action Council is the first initiative of its kind in the history of the B20. It has been established with the recognition that mainstreaming women in business is key to improving the standards of business conduct including integrity, empathy, and creativity, thus adding to economic growth and productivity,” said Yousef Al-Benyan, Chair of the B20 Saudi Arabia.
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GATF’s Candice White: How making trade faster and easier empowers women around the world. Policymakers, businesses and the development community must focus on increasing trade opportunities for women and eliminating the challenges to trade that exist today. One such mechanism to reduce non-tariff trade barriers and red tape so that women-owned businesses can reap the benefits of trade is the Global Alliance for Trade Facilitation. The Alliance is a mechanism to bring governments and businesses together to help countries implement the Trade Facilitation Agreement. If fully implemented, the agreement stands to reduce trade costs by more than 14% in low-income countries and more than 13% in upper-middle-income countries, according to estimates. For example, Alliance projects in Zambia and Malawi are creating new licensing frameworks for customs clearing agents, a field where women are largely underrepresented, and establishing accredited training programmes for agents to upskill. A scholarship fund designed to support agents in becoming professionally licensed is being used to attract women to join the industry.
Roadmaps for developing the pharmaceutical industry in West Africa (UNIDO)
A new set of publications comprising a regional reference framework and country-specific roadmap documents has been released to support the development of the pharmaceutical industry in ECOWAS. It was produced by UNIDO with financial support from the WAHO. The publications feature a risk-based and stepwise approach towards compliance with international standards of Good Manufacturing Practices (GMP). GMP is a system for ensuring that products are consistently produced and controlled according to quality standards. It is designed to minimize the risks involved in any pharmaceutical production that cannot be eliminated through testing the final product. Implementing these tools within the region will be part of a comprehensive programme that UNIDO and WAHO are currently developing in order to strengthen the West African pharmaceutical manufacturing industry. The pharmaceutical industry in Africa is a priority sector for the Third Industrial Development Decade for Africa (IDDA III), which is operationalized by UNIDO as per the resolution of the UN General Assembly in 2016. [Note: The framework document - available in English, French, and Portuguese- and the Roadmaps for all ECOWAS Member States can be accessed here]
Mauritius: AfCFTA stakeholders workshop on boosting intra-Africa trade (GoM)
The Vice-President of the Republic of Mauritius, Mr Eddy Boissézon, highlighted the need for the creation of a single African continental market for goods and services, with free movement of business persons and investments, which he said will help expand intra-African trade through better harmonisation and coordination of trade liberalisation and facilitation. He further underlined the need to develop rapidly road maps for the implementation of blockchain and artificial intelligence technologies in Africa adding that these technologies will drive the emerging Fourth Industrial Revolution. The Vice-President also spoke on the digital economy in Mauritius which according to him, has gone a long way to position itself as the 3rd pillar of the economy and pitched on a high growth path.
Towards an African Human Security Index: update (AU)
The consultative meeting (5-6 March) provided a useful platform for receiving feedback from experts on the suitability of the proposed conceptual design and methodology of the index taking into account data availability across African Union Member States. Mrs Thokozile Ruzvidzo (Gender, Poverty and Social Policy Division, UNECA) highlighted that the proposed AHSI is an attempt to provide a holistic assessment of human security through its seven dimensions of economic security, food security, health security, environmental security, personal security, community security, political security. She further added that AHSI is directly responds to both Agenda 2063 and the 2030 Agenda on the centrality of human security as an enabler and precondition for sustainable and inclusive development.
European Commissioner for Trade, Phil Hogan: Showing the value of trade policy (The Parliament Magazine)
Signing deals with global partners builds trust and understanding, which in turn means increased opportunities to cooperate in other areas of policy. On that basis, we want to use our network of trade deals as leverage to improve standards worldwide. This is one way to ensure “a more geopolitical Europe”, in the words of Commission President Ursula von der Leyen. The European Union is a regulatory superpower. This means that we are often at the head of the pack when it comes to setting standards worldwide. Our global partners look to us for leadership in a wide range of areas. We are leading the way in climate action, global institutional reform, data protection and a huge number of other areas. So, when we sign trade agreements, we expect our partners to meet our standards. Take data protection; our EU regulation in this complex policy area is viewed as a global trendsetter and has been adopted by many other countries.
Or take climate action; Europe is already a global leader in implementing the COP21 targets, but our ambition has been turbocharged by President von der Leyen’s flagship initiative, the European Green Deal. Our recent trade agreements have contained a Trade and Sustainable Development chapter, including legally binding commitments to effectively implement the Paris Agreement.
This was a step in the right direction; but for our future trade agreements, we will go even further, tying in the Paris Climate Agreement as an essential element. Another area where we are hoping to find common ground with our partners is on the rules governing global trade.