Search News Results
tralac’s Daily News Selection
Diarise: South Africa’s June 2020 merchandise trade statistics will be released on Friday. ABSA forecasts a merchandise trade surplus “due to a combination of weak domestic demand, favourable terms of trade and seasonal factors.”
Profiled forthcoming EAC Secretariat events:
-
2nd Regional Committee on Trade in Services Meeting to consider the Regulatory Audit Reports, 29-31 July
-
EAC – UK senior officials meeting, 13-14 August
-
Economic Affairs Subcommittee of the MAC to discuss Common Market Scorecard, 17 August
The UN Secretary-General, António Guterres, has appointed the director of UNCTAD’s division on international trade and commodities, Pamela Coke-Hamilton, as the new executive director of the International Trade Centre.
AfCFTA Investment policy advisor: In order to complete outstanding issues on the phase two investment protocol and prepare a successful implementation of the agreement, the AU Commission Department of Trade and Industry requires assistance in the form of a technical expert on investment.
WTO report shows members moving to facilitate imports even as trade restrictions remain high (WTO)
While import-restrictive measures introduced by WTO members continued to affect a growing share of global trade, the Director-General’s latest mid-year report on trade-related developments presented to members on 24 July also indicates a shift towards import-facilitating measures, including products related to the COVID-19 crisis. Between mid-October 2019 and mid-May 2020, WTO members implemented 363 new trade and trade-related measures, 198 of them trade-facilitating and 165 trade-restrictive. Most of them, 256 (about 71%) were linked to the pandemic.
The new import restrictions covered traded merchandise worth an estimated $423.1bn, the third-highest value since October 2012. WTO estimates indicate that the cumulative trade coverage of import-restrictive measures implemented since 2009, and still in force, amounts to $1.7 trillion or 8.7% of world imports. This figure has grown steadily since 2009, both in value terms and as a percentage of world imports. The trade coverage of non COVID-19 related import-facilitating measures was estimated at $739.4bn, which is significantly higher than the USD 544.7 billion recorded in the previous report (from mid-May to mid-October 2019) and represents the second-highest figure since October 2012.
African Confidential: A state of disconnect. African treasuries are putting a positive spin on their own finances, but the message from the markets is grim. Something has to give. “Meanwhile, the AU’s plan to set up a continent-wide special purpose vehicle to convert debt into longer-term instruments, has obtained little support. Although some have detected more G20 support for commercial lenders to offer concessions...Yet discussions on private-sector debt restructuring have scarcely moved:
- Reuters poll: Sub-Saharan Africa GDP to contract 3.1% this year
Botswana: SACU revenue surpasses tourism receipts (Southern Times)
The Bank of Botswana (BoB) says money from the SACU has overtaken tourism to become the country’s second largest revenue earner after diamonds. In a media briefing last week, the media on the latest economic developments recently, BoB director of research and financial stability, Dr Tshokologo Kganetsano, said Botswana was earning roughly P3,5 billion (approximately $303m) very three months in SACU revenue. However, Botswana’s monthly import bill is around P5,5 billion (or $470m) monthly. “What we are receiving every three months (from SACU receipts) is lower than what we need every month,” said Dr Kganetsano, emphasising the need to move away from overreliance on diamonds, more so at a time the mining sector has been negatively affected by COVID-19. “With no revenue from diamonds, we are faced with an increasingly worrying situation. Hence economic diversification is more urgent than ever before,” he said. Dr Kganetsano attributed a sharp decline in economic growth to weak performance of the diamond industry the previous year. He said growth in mining output decelerated mainly due to the slow expansion of the diamond industry, which went from 3,2% to 2,1%.
Ghana: 2020 mid-year budget statement (pdf, MoF)
External sector performance was mixed in the first quarter of 2020, reflecting in a higher trade surplus and improved current account balance on one hand, and a deceleration in inflows into the financial account on the other. For the first five months of the year 2020 (January - May), total exports decreased by 8.1% to $6,205.42m. The decrease was attributed to a fall in export receipts mainly from oil, non-traditional exports, timber and aluminium. The import bill for the same review period amounted to $5,162.13m compared to $5,576.24m in the corresponding period of 2019. This was driven by a fall in the demand for oil and non-oil imports.
Estimated oil imports declined by 21.22% to $815.44m from $1,035.04m recorded in 2019. The total value of non-oil merchandise imports was provisionally estimated at $4,346.69m, down by 4.28%, compared to an outturn of $4,541.20m recorded in the same period in 2019. This was attributed to a fall in demand for capital and intermediate goods. As a result, the trade balance recorded a surplus of $1,043.29m compared to a surplus of $1,178.26m in the corresponding period of 2019.
The trade balance is projected to record a surplus of $1.76bn in 2020 (pdf). On the other hand, the services, income and transfers account is projected to deteriorate as a result of a projected drop in remittances. Net remittance inflows are projected to significantly decline from $3.39bn in 2019 to $1.92bn in 2020. Consequently, we project the current account balance to record a higher deficit of 3.6% of GDP at the end of 2020 compared to a deficit of 2.8% recorded at the end of 2019. The capital and financial account is projected to record net inflows of about $2.80bn compared to $3.07bn recorded in 2019, on account of a projected decline in foreign direct investment and projected outflows in portfolio investments as a result of maturities not being rolled over. Overall, we project the balance of payments to record a surplus of $350m compared to $1.34bn surplus in 2019. This should boost gross international reserves at the end of 2020 to $8.77bn, sufficient to provide 4.1 months of import cover.
Charles Cormier: Regional electricity trade, key to unleashing West Africa’s power (World Bank Blogs)
Thanks to strong leadership from regional bodies and sustained financial support from international donors, substantial progress has been made in developing cross-border transmission lines to pave the way for regional trade. About $5bn has been invested by various donors in cross-border transmission lines over more than one decade. The World Bank’s International Development Association alone has provided $1.8bn in financing toward completing primary interconnections and regional infrastructure. There are currently 4,000 kilometers of transmission lines under development, and their imminent completion will allow electrons to flow all the way from Abuja in Nigeria to Dakar in Senegal, opening up vast opportunities for every single country along the way. However, realizing the gains from a regional power market requires more than infrastructure.
While the physical infrastructure is an indispensable foundation, it will take concerted policy and institutional reforms for that infrastructure to deliver its full potential. In West Africa, many barriers exist for countries to build trust in trade. Exporting countries need to be sure that they will be paid in a timely manner for electricity sales, and importing countries need to be able to rely on the delivery of quantities of electricity when they need it. As in any trade, there needs to be a clear mechanism to secure and enforce trading contracts, which are currently wanting. And while a regional approach is essential, it is not enough. Achieving regional trade goals also rests on addressing deficiencies at the national level. As we look ahead, there are grounds for optimism. The region has come together to put in place several critical reforms that countries would need to undertake at a national level and in a coordinated fashion to facilitate regional trade in the region.
Noble Banadda: How smart investments in technology can beef up Africa’s economy (The Conversation)
There is no shortage of technological innovations designed to boost animal agriculture in Africa. These range from GPS tracking systems which identify and trace pastoralists’ herds to livestock vaccine SMS services that alert farmers to disease outbreaks. But to unlock the economic potential of the sector as demand for meat and milk swells threefold towards 2050, countries must invest in the critical areas that will improve quality across the whole value chain. That is increasing productivity and quality from the breeding of the animal throughout the production process to the end product. This includes safe storage, handling and sale. My native Uganda offers some useful lessons from its use of smart investments in technology and farmer organisation. These have made it the only East African country that is self-sufficient in milk.
As highlighted by a new report from the Malabo Montpellier Panel on which I sit, the same can be achieved elsewhere. It can also benefit other livestock commodities, to give Africa food sovereignty across animal-sourced foods and greater access to international markets. The report makes 11 recommendations for Africa’s livestock sector. These range from technological innovations and supportive policies to addressing trade barriers and challenges specific to each commodity. [The author is professor and Chair of the Department of Agricultural and Bio Systems Engineering, Makerere University. Download: Meat, Milk & More: Policy innovations to shepherd inclusive and sustainable livestock systems in Africa
When the well runs dry: Finding solutions to COVID-19 remittance disruptions
Even when the global economy begins its recovery, steep transaction costs will eat into meager remittances and lengthen the return to pre-crisis levels. Compared to other regions, SSA remains the most expensive destination for remittances, hence the region will clearly benefit from reduced transaction costs during the COVID-19 crisis and beyond. Lowering remittance costs will likely save Africa billions of dollars, while increasing the disposable income of millions of households. The classification of money agent services as essential would facilitate the process of sending and receiving remittances. Promoting and amplifying the use of digital technology (mobile and electronic payments) to process transfers could also ease the process; digital payments also eradicate the concerns many people have of COVID-19 transmission through the handling of cash. Governments should encourage increased competition among services providers and promote the increased use of digital payment systems. Migrants and their families also suffer under too-strict regulations. Designed to reduce money-laundering, stiff rules hurt real people who send remittances of about $200 a month to their families. Loosening anti-money-laundering measures needs to be embraced so the region can recover more quickly from this economic crisis.
Only swift action will achieve an African maritime renaissance (ISS Africa)
Good ocean policies can unlock new sources of wealth and transform Africa’s security, development and governance prospects. A new study commissioned by the High Level Panel for the Sustainable Ocean Economy shows that investing in oceans yields benefits five times higher than the initial outlay. Over the next 30 years, the report says, these actions could provide net global returns of between $8.2 trillion and $22.8 trillion – as long as they are underpinned by blue economic principles and values. The value of the blue economy concept is that it provides a way to sustainably develop ocean resources while ensuring the health of maritime ecosystems. This is why the idea has rapidly found favour in Africa and globally. The blue economy is now an integral part of the sustainable development discourse and has acquired significant political importance. To reinforce this message, Africa and the AU need to focus in 2020 on moving from plans to action. The continent has many maritime strategies but implementation is lagging. Capacity constraints are part of the problem and could worsen as pressures to address COVID-19 intersect with enduring challenges such as the effects of climate change on the oceans. This intersection is arguably creating a ‘perfect storm’ for African decision makers. They need to decide how to transition to blue economies while buffeted by unfavourable political, economic and environmental conditions. [The authors: Timothy Walker, Denys Reva]
pdf Trucking: A performance assessment framework for policymakers (1.77 MB) (World Bank)
There is a global need to better understand the inner workings of trucking markets and how these relate to performance. Despite the critical role that trucking plays as a dominant mode in most countries’ freight transport task, and as a key determinant of both private logistics costs and economic externalities, remain insufficiently understood and under-studied. This report starts from the basic definition of actors as comprising trucking service providers on the supply side, shippers and beneficial cargo owners on the demand side, and the public sector, broadly defined, on the side of the public interest that is reflected in issues of import to society at large. But it is critical to delve deeper to reflect the way trucking operations are conducted in practice, by disaggregating these main actor types into further dimensions of supply, demand, and public interest factors to arrive at a more realistic view of performance. The report is structured as follows. Chapter 1 describes the organizational structure of the trucking industry in the international experience. Chapters 3 through 5 subsequently describes the interests and typical decision-making motivations for each type of actor, and what ‘performance’ means to each of them. Chapters 5 concludes.
Africa’s governance response to COVID-19: preliminary report (APRM, African Union)
The report also examines the processes whereby measures are imposed and implemented by AU member states at national levels. AU member states have either deployed existing legal and institutional mechanisms or established new ones to respond to the pandemic. The mechanisms thus introduced focus on i) legal and institutional measures; ii) disease prevention and containment measures, iii) social and humanitarian measures; and iv) fiscal and monetary measures. The report investigates the effectiveness of these measures, in terms of the following (pdf): ensuring desirable outcomes, impacting the enjoyment of human rights, ensuring equal treatment of citizens, and facilitating the accountability of government to the public. At the continental and sub-regional levels, the report examines how Africa has responded to COVID-19, including the “Africa Joint Continental Strategy for COVID-19 Outbreak”, centralised provision of technical support, multilateral approaches to resource mobilisation, and peace and security governance. As regards the sub-regional level responses, the report provides a detailed account of the multilateral measures implemented by the – AU and RECs: ECOWAS, IGAD, EAC, SADC, COMESA.
-
African Ambassadors and UN in China hold dialogue on socio-economic response to COVID-19
-
pdf SADC Regional Response to COVID-19: Bulletin 9 (3.25 MB)
-
“Temporary Basic Income” could slow COVID surge, provide lifeline for world’s poorest
Today’s Quick Links:
Maetin Owuor: As a sovereign state, Kenya has right to negotiate trade deal with US
WCO project to build border security capacity in West and Central Africa comes to an end
UK, India agree deeper trading relationship at cabinet level summit
Australia’s spot as China’s top source for iron ore under threat as new mega ports open door for Brazil, Africa
Sweden, Korea fund UNCTAD to, inter alia, assess the impacts of the coronavirus pandemic on e-commerce
Why wind and solar would offer the DRC and South Africa better energy deals than Inga 3
Related News
WTO report shows members moving to facilitate imports even as trade restrictions remain high
While import-restrictive measures introduced by WTO members continued to affect a growing share of global trade, the Director-General’s latest mid-year report on trade-related developments presented to members on 24 July also indicates a shift towards import-facilitating measures, including products related to the COVID-19 crisis.
Between mid-October 2019 and mid-May 2020, WTO members implemented 363 new trade and trade-related measures, 198 of them trade-facilitating and 165 trade-restrictive. Most of them, 256 (about 71 per cent) were linked to the pandemic.
"The report makes clear that a substantial share of world trade continues to be affected by new and accumulated import-restrictive measures, which is cause for concern at a time when economies will need trade to rebuild from the effects of the COVID-19 crisis," said Director-General Roberto Azevêdo, who presented the report to WTO members. "On a more positive note, the report shows that members also introduced import-facilitating measures on an impressive scale, and have started to scale back trade restrictions introduced earlier in the pandemic,” he added.
The Director-General's full speech to launch the report is available here.
The report, which was reviewed at a meeting of the WTO’s Trade Policy Review Body, notes that 56 new trade-restrictive measures not related to the pandemic were implemented between mid-October 2019 and mid-May 2020 – mainly tariff increases, import bans, exports duties and stricter exports customs procedures. The new import restrictions covered traded merchandise worth an estimated USD 423.1 billion, the third-highest value since October 2012. WTO estimates indicate that the cumulative trade coverage of import-restrictive measures implemented since 2009, and still in force, amounts to USD 1.7 trillion or 8.7 per cent of world imports. This figure has grown steadily since 2009, both in value terms and as a percentage of world imports.
Even if trade restrictions remain widespread, the report also finds evidence of WTO members moving towards trade-facilitating policies across sectors during the review period, with 51 new trade-facilitating measures not related to COVID-19 implemented. These measures mainly included the elimination or reduction of import tariffs, the elimination of import taxes, the simplification of customs procedures and the reduction of export duties.
The trade coverage of non COVID-19 related import-facilitating measures was estimated at USD 739.4 billion, which is significantly higher than the USD 544.7 billion recorded in the previous report (from mid-May to mid-October 2019) and represents the second-highest figure since October 2012.
The report shows that by mid-May 2020 WTO members implemented 256 trade and trade-related measures explicitly linked to the COVID-19 pandemic, with export bans accounting for the totality of the pandemic-related export restrictions recorded. These COVID-19 related measures appeared to have come in two clearly identifiable waves. In the early stages of the pandemic, several of the measures introduced restricted the free flow of trade but as of mid-May 2020, 57 per cent of all measures were of a trade-facilitating nature. In early May, some members began to phase out export constraints, targeting products such as surgical masks, gloves, medicine and disinfectant. There is further evidence that a roll-back of other trade and trade-related measures taken in the early stages of the pandemic is also taking place. For instance, around 28 per cent of the COVID-19-specific trade-restrictive measures implemented by WTO members and observers had been repealed by mid-May.
Prepared against the backdrop of COVID-19, the report does not yet reflect the full impact of the pandemic on trade. According to WTO data published on 22 June, estimates for the second quarter of 2020 indicate a year-on-year drop in world trade of around 18 per cent.
Regarding general economic support measures, only 21 per cent of WTO members notified these actions in response to the Director-General's request for information. From the limited information received, and from the research undertaken by the WTO, the current review period confirmed that WTO members appeared to continue to implement such measures as part of their overall trade policy.
Separate from these longstanding policies, the review period saw an unprecedented number of emergency support measures introduced by members in response to the economic and social turmoil caused by the COVID-19 pandemic. Most of these measures appeared to be of a temporary nature. These include grants, monetary, fiscal and financial measures, measures targeting micro, small and medium-sized enterprises (MSMEs), loans, credit guarantees and stimulus packages. Several measures were one-off grants while others included disbursements staggered over a few months and up to three years. Some of these measures form part of larger emergency rescue programmes worth several trillion US dollars.
Related News
tralac’s Daily News Selection
Kenya’s Ministry of Industrialization, Trade and Enterprise Development posts a call for consultants to provide technical assistance towards the negotiations for the proposed FTA between Kenya and the United States of America. The closing date for submissions of expression of interest is 28 July, 2020 at 10.00 am.
Technical Expert Legal Advisory Services. The consultants will, inter alia, undertake the following tasks:
-
Undertake capacity building training to the negotiators and other select groups on legal matters to be considered during negotiations
-
Undertake analytical study on legal issues on the proposed Kenya –USA FTA to provide evidence for decision making in all areas of negotiations. This study will analyse legal issues arising from Free Trade Area Agreements USA has signed with other countries, carry out an assessment of legal impact of proposed FTA on Kenya’s Trade, border revenue collections, and Investment among others
-
Profile of potential sectors to benefit from KE-US FTA
-
Undertake analysis of legal issues arising on other WTO Agreements that are relevant to the proposed FTA and identify legal and policy space that could guide in the negotiations, with the aim of translating the FTA to a development tool
-
To advise on the legal position that Kenya should pursue in Service Sectors negotiations;
-
Analyze legally how the FTA will impact on Kenya’s bilateral and regional commitments in existing Regional Economic Communities in which Kenya is a member.
Technical Expert Economic Advisory Services. The consultants will, inter alia, undertake, the following tasks:
-
Undertake simulations in economic trade scenarios between Kenya and USA to inform decision making, in the context of industrial, agricultural and services sector development
-
Carry out analytical economic studies on Investment and IPR in the context of proposed FTA
-
Economically advise on the position that Kenya should pursue in trade of goods service sectors in the negotiations.
Technical Expert Multilateral Trade Advisory Services. The consultants will, inter alia, undertake the following tasks:
-
Undertake multilateral trade negotiation simulations on various trade scenarios between Kenya and USA to inform decision making, in the context of industrial, agricultural and services sector development
-
Develop, using outcome of multilateral trade analytical work, redlines/boundaries and fall back positions in all areas of negotiations taking into consideration Kenya’s strategic interests and existing bilateral, regional and multilateral commitments.
Technical Expert Agricultural Goods SPS and Standards. The consultants will, inter alia, undertake the following tasks:
-
Undertake agricultural analysis studies on the proposed Kenya-USA FTA to provide evidence for decision making in all areas of negotiations. This study will analyze Free Trade Area Agreements USA has signed with other countries, carry out an assessment of the impact of proposed FTA on Kenya’s Trade, border revenue collections, and Investment among others;
-
Profile potential agricultural sectors to benefit from KE-US FTA
-
Undertake analysis on agricultural WTO Agreements that are relevant to the proposed FTA and identify multilateral level flexibilities and policy space that could guide in the negotiations, with the aim of translating the FTA to a development tool.
-
Analyse on how the FTA will impact on agricultural goods in Kenya’s bilateral and regional commitments in existing Regional Economic Communities in which Kenya is a member.
A study of the Regional Economic Communities of EAC, SADC, ECOWAS (Diakonia)
The purpose of this assignment is to study the policy processes at the RECs through a careful mapping of policy actors and actor coalitions, policy interests and incentives, the set of institutional arrangements that enable or constrain policy and how these are linked to national policy processes, and subsequently, how the implementing partners can effectively engage and influence norms at this level. The aim of the assignment will, inter alia, be to: Analyse governance structures of the RECs with the aim of assessing how they engage with organised CSO groups at regional level (such as, East Africa Civil Society Organisations’, West African Civil Society Forum, the Southern Africa Development Community Council of Non-Governmental Organisations and the SADC Civil Society Forum CSOs, as well as other regional CSO networks), member states, the African Union, and other relevant commissions involved in policy making on Domestic Resource Mobilisation.
Malawi Economic Monitor: From crisis response to a strong recovery (World Bank)
The COVID-19 pandemic is expected to have considerable negative impact on Malawi’s growth in 2020. Economic activity will be affected by both global and domestic factors. Global factors that have impacted Malawi include (pdf):
Disruption in global value chains: Global value chains, especially the importation of key production inputs, have been disrupted as social distancing affected output in exporting countries. However, Malawi’s key trade partners—South Africa and China—have both begun reducing previously severe restrictions. South Africa has reduced its lockdown level from 5 (the most severe) to 4 in May, and 3 in June, which is expected to mitigate this impact. South Africa’s exports fell by more than 60% y-o-y in April, before rebounding in May, but they were still more than 25% below the year prior. Moreover, China is the largest supplier of intermediate inputs for manufacturing in Malawi. After active COVID-19 cases in China declined, production and exports started rebounding from March, and since that time, they averaged only 1.5% below the year prior.
Increased trade and logistics costs and delays: Flow of goods through Malawi’s borders and those of its key trade partners is being affected by frequent transit stoppage, lack of personal protective equipment for border officials, and higher cost of air cargo. This is compounded by policy unpredictability and information asymmetry in a context where Governments are regularly adopting new trade measures. If the different actors engaged in supply chains are not aware of these new requirements, this can risk unnecessary disruptions. Malawi Revenue Authority customs data suggest that imports were 26% lower in April and May 2020 than in the same period last year (based on value for duty purposes estimates), which coincides with reported delays in shipments from South Africa. Informal imports coming from Mozambique and Zambia have also reportedly decreased. Some countries have also pursued export restrictions on some medical and agricultural commodities, which could trigger negative spillovers. Malawi has blocked re-exports of medical products, particularly masks. Moreover, Malawi’s continuing export ban on maize in the midst of a bumper harvest is weighing on potential income growth.
Decreased demand in export markets: Lower global demand and trade restrictions are expected to weigh on some export products. Key product markets are facing severe recessions, including the European Union (about 32% of Malawi’s exports) and other trade partners — South Africa (10%) and rest of Africa (26%). However, as Malawi’s main exports are tobacco (over 50%), sugar, and tea, global demand for these products has been relatively inelastic in the past decade, mainly affected by supply shocks and changes in contracts, so that the impact may be somewhat mitigated. However, the tobacco auction season through early July has seen a decrease in sales, with a 11.9% reduction in sales values, due to a 14.7% reduction in volumes partially offset by a 3.2% increase in average price.
Significant decrease in tourism: Tourism has been heavily affected, but its contribution to growth in Malawi is lower than in EAC countries. The flow of visitors has effectively come to a standstill, with increased risk aversion and travel bans combining with Malawi closing its international airports since the beginning of April. This has also been affected by lower domestic business travel and tourism. However, tourism is a smaller sector than in some neighboring countries. According to the World Tourism Organization, 870,000 tourists visited the country in 2018, with only 17% from outside Africa. This is only about half the total figure for countries such as Kenya and Tanzania, where more than 50% of visitors are from outside Africa. The decrease in tourism is expected to reduce GDP growth of services such as transportation (about 2.9% of GDP) and accommodation and food services (about 2.0% of GDP).
South Africa: official perspectives on economic and trade policy issues
-
SA Reserve Bank: July 2020 statement of the Monetary Policy Committee. Our second quarter estimate for output has been revised lower. The Bank currently expects GDP in 2020 to contract by 7.3%, compared to the 7.0% contraction forecast in May. Even as the lockdown is relaxed in coming months, for the year as a whole, investment, exports and imports are expected to decline sharply. Job losses are also expected to rise further. Easing of the lockdown has supported growth in recent weeks and high frequency activity indicators show a pickup in spending from extremely low levels. However, getting back to pre-pandemic activity levels will take time. GDP is expected to grow by 3.7% in 2021 and by 2.8% in 2022. South Africa’s terms of trade and commodity export prices remain high. While oil prices are generally low, they have increased since the May meeting. The Brent crude oil price is expected to average about $40 per barrel in 2020, rising to $45 per barrel in 2021 and $50 per barrel in 2022.
-
Trade, Industry and Competition Department Budget Vote 2020/21: speech by Minister Ebrahim Patel. The industrial age is not over, but it will be profoundly re-shaped by digital technologies, greener industries and industrial agility. South Africa must find its niche in this new environment. There can be no return to the ‘old normal’. And nor should there be. It was not fit for future purpose. Established industries, though critical in our economy, will not be able to create the millions of jobs required. To prepare for the post-covid world, we will strengthen efforts around reconstruction and recovery, including broader pacts with workers and businesses, focused on saving as many firms and jobs; identifying new opportunities; embracing digital technologies to recover and change; addressing economic inclusion with greater urgency. Building on the solid progress of last year, but adapting our strategy in light of the historical moment created by the pandemic, each of the six priority programme areas will now be recalibrated to save lives and protect livelihoods:
-
To strengthen economic dynamism, we will complete two new Master plans: one for furniture which employs 65 000 people in SA with potential for many more small-scale artisans; plus another for the steel industry, the foundation of our industrialisation, employing nearly 250 000 people. But the Department’s mandate is not only to produce new Masterplans; more importantly is to ensure implementation, which will be the focus of masterplans for autos, clothing, sugar and poultry.
-
To help pivot the economy from its reliance on imports, to greater levels of local manufacture, we will finalise at least three new agreements on localisation and supplier development, following discussions with CEOs at: Fast food producers, Hardware stores, Grocery retailers, Food and consumer goods manufacturers - CTFL retailers and manufacturers.
-
In the area of trade: to provide trade support to local firms, both in the domestic market and for exports, we will complete talks with the EU on trade access; strengthen the actions against illegal imports - Smugglers beware – we will crack down further on customs fraud on imported goods, building on early successes by SARS; and seek agreement to enable the AfCFTA to commence trade by the start of 2021. South Africa is well-positioned to become a major supplier of industrial goods and value-added services to the continent. A combined push from the IDC and ECIC can contribute to this. We will develop tangible targets to guide the work of South Africa’s Foreign Economic Representatives stationed at embassies, focused on export promotion and investment enhancement. Economic diplomacy is essential to building resilience.
- pdf Address to the National Assembly Budget Vote Session: Ebrahim Patel, Minister of Trade, Industry and Competition (139 KB)
-
-
10th BRICS Trade Ministers Meeting: summary of briefing by Minister Ebrahim Patel. The second observation he shared with his BRICS counterparts is that the benefits of highly integrated supply-chains come with enormous vulnerabilities when they are disrupted. African countries are learning the hard lesson that if we are simply exporters of raw materials and importers of medication, medical equipment and other critical goods, then our ability to ensure protection of citizens in moments like these, is compromised,” Minister Patel stated. He added that building resilient and diversified supply-chains must include building domestic manufacturing capabilities as part of building new, inclusive supply-chains: “An inclusive supply-chain means that manufacturing capacity is diversified across countries and South Africa, and indeed the African continent, is ready to expand production for both existing product lines and new product opportunities. This does not entail disengaging from global trade, investment and cooperation – they remain important sources of growth and development and we will certainly need to intensify international cooperation. However, we do not think it wise or the right time to consider new binding global or plurilateral rules in haste at a time of such crisis. We need to retain flexibility to respond with all available policy tools to address the crisis and effect economic recovery.”
-
Xinhua: BRICS countries pledge further cooperation in e-commerce, IPR
-
India’s commerce and industry minister Piyush Goyal used the BRICS platform to underline the need for enhanced transparency from countries to build trust and ensure that their role as “a pre-eminent trade partner” was not lost, in what was seen as a message to China.
-
-
National Treasury Budget Vote: speech by Minister Tito Mboweni. We all agree that economic growth is urgent. One of the key projects that the National Treasury will be driving is to work closely with our colleagues in the rest of Government to drive a package of reforms to improve productivity, lower costs and reduce demands of state-owned companies on the public purse. These measures include finalising electricity determinations, unbundling Eskom and taking other steps to open up energy markets, modernising ports and rail infrastructure, and licensing spectrum. The Deputy Minister, Dr David Masondo, has been tasked with the critical job of driving Operation Vulindlela, which coordinates the critical structural reforms our economy desperately needs to grow. He will work closely with the Presidency in this endeavour, and it will put economic growth at the centre of what we do as the National Treasury and as Government. To realise the full benefits of these reforms for the economy’s growth potential over the long term, implementation should begin now. [Speech by Deputy Minister David Masondo]
Related News
Minister Patel tables Department of Trade, Industry and Competition Revised Budget Vote 2020/2021
Extracts from Minister Patel’s Address to the National Assembly
During the first Budget Vote under the new Administration in July last year, Deputy Ministers Gina, Majola and I laid out a six-point programme of work for the dtic over the next five years.
Before the onset of the Covid-19 pandemic, we had made solid progress in each of these areas, despite significant economic headwinds.
Covid-19 period and impact
All of those actions had at a time of slowing growth and global trade tensions, increased the resilience of our economy by rebuilding our industrial base and restoring our trade position.
And then Covid-19 struck.
Today’s session thus takes place in very different circumstances from last year’s Budget Vote, here and elsewhere in the world. The pandemic and its economic fallout have been described by leading economists as unprecedented in our generation. Projections are that it may result in
-
the worst global recession since WWII (World Bank, 8 June 2020)
-
the worst UK recession in 300 years (Bank of England, May 2020)
-
China experiencing its slowest annual growth since the death of Mao Zedong in 1976 (IMF April 2020 data; Bloomberg April 2020, dtic calculation)
-
the highest US unemployment since the Great Depression (US Bureau of Labor Statistics, May 2020).
South Africa is now in the grip of the pandemic, with a surge in cases and a devastating impact on communities, firms and workers. Both lives and livelihoods are being lost.
In the weeks before our lockdown started, some businesses were already closing because their global supply-chains were disrupted. As the scale of the pandemic became clearer and governments across the world introduced lockdowns to limit movement and save lives and flatten the curve of infection, demand for goods and services dramatically decreased, creating a toxic cocktail that is devastating people’s lives across the world.
But South Africans are resilient and in spite of the difficult hand we have been dealt, citizens, firms and government have responded in a way that has mitigated the risks and protected those vulnerable to the impact of the Coronavirus.
When global supply-chains broke down and we could not buy ventilators and PPEs elsewhere in the world, we needed to show our resilience by falling back on our own enterprise and innovation.
We scaled up the local manufacture of basic COVID-19 supplies, quickly ramping up production of medical-grade masks from 6m to 13m units a month. These companies included locally-owned ones and local workers produced the masks.
This week, the first units of a locally-made ventilator machine, a CPAP, is being assembled at factories, with 20 000 units that will be produced in record time, led by capable teams drawing in some of South Africa’s best science capabilities.
I previously briefed the Portfolio Committee on the wide range of measures we have taken to deal with the crisis, from support to businesses through funding, to securing scarce medical goods.
As an example, we issued regulations and directions to fight price hikes during the pandemic and thus far the Competition Commission has levied stiff penalties on 28 firms to a value of more than R16 million. Our intention was to ensure that no-one was able to exploit the crisis to profit from other people’s pain and suffering and add to further pressure to domestic budgets.
The lesson is that when confronted with a challenge, we found the will, the innovation and the industrial capacity to do the job. We proved as South Africans that we can be resilient.
Now we must recognise the historical moment and the opportunity it provide. We must build even greater resilience by making “strategic localisation” a major domestic policy goal.
The way ahead and commitments
As a result of the impact of Covid-19 we must carry out our responsibilities within an even more constrained environment and faced with a triple whammy:
-
The dtic Budget has been cut quite substantially with R1,8 billion taken off as a result of the need by the state to reprioritise resources;
-
agencies who rely in part on income from the public or their investment holdings have had sharp reductions in their income and resources;
-
While at the same time the needs of firms and workers have grown as a result of the damage caused by the pandemic.
There are no easy answers and we are faced by what some call a ‘perfect storm’. Yet it is precisely in this most difficult moment that we as South Africans will need to find our resilient core.
To repair the damage of Covid-19 and reconstruct the economy to create more jobs, bring more young people into entrepreneurship and increase economic inclusion, we need to think boldly and implement smartly.
The industrial age is not over, but it will be profoundly re-shaped by digital technologies, greener industries and industrial agility. South Africa must find its niche in this new environment.
There can be no return to the ‘old normal’. And nor should there be. It was not fit for future purpose. Established industries, though critical in our economy, will not be able to create the millions of jobs required.
To prepare for the post-COVID world, we will strengthen efforts around reconstruction and recovery, including broader pacts with workers and businesses, focused on saving as many firms and jobs; identifying new opportunities; embracing digital technologies to recover and change; addressing economic inclusion with greater urgency.
As a first step, every directorate of the dtic and every agency will prioritise saving firms and jobs, and report on a monthly basis on their impact. Wherever possible, the dtic institutions will be asked to reallocate resources to this goal. Work will be reorganised to support the District Development Model, to get more bang for each rand we spend. We will streamline approval processes for funding from IDC, NEF and DTIC so that we avoid duplication; and consider a common back-office for smaller dtic agencies, covering some finance, ICT and human resource functions. With a smaller budget, we must draw on resources of social partners and use non-fiscal means to achieve public goals, such as competition market inquiries and the equity equivalent programme.
Building on the solid progress of last year, but adapting our strategy in light of the historical moment created by the pandemic, each of the 6 priority programme areas will now be recalibrated to save lives and protect livelihoods:
First, to strengthen economic dynamism, we will complete two new Master plans: one for furniture which employs 65 000 people in SA with potential for many more small-scale artisans; plus another for the steel industry, the foundation of our industrialisation, employing nearly 250 000 people. But the Department’s mandate is not only to produce new Masterplans; more importantly is to ensure implementation, which will be the focus of masterplans for autos, clothing, sugar and poultry.
Second, to help pivot the economy from its reliance on imports, to greater levels of local manufacture, we will finalise at least three new agreements on localisation and supplier development, following discussions with CEOs at:
-
Fast food producers
-
Hardware stores
-
Grocery retailers
-
Food and consumer goods manufacturers
-
CTFL retailers and manufacturers.
This is partnership in action.
Third in the area of trade: to provide trade support to local firms, both in the domestic market and for exports, we will complete talks with the EU on trade access; strengthen the actions against illegal imports – Smugglers beware – we will crack down further on customs fraud on imported goods, building on early successes by SARS; and seek agreement to enable the AfCFTA to commence trade by the start of 2021.
South Africa is well-positioned to become a major supplier of industrial goods and value-added services to the continent. A combined push from the IDC and ECIC can contribute to this. We will develop tangible targets to guide the work of South Africa’s Foreign Economic Representatives stationed at embassies, focused on export promotion and investment enhancement. Economic diplomacy is essential to building resilience.
Fourth, on investment: we will focus on consolidating the presence of firms who have existing operations and help those who made investment pledges, to bring projects to fruition. New areas for investment include deepening our production of PPEs, medical equipment and pharmaceuticals.
Fifth, on transformation: our efforts will go to providing non-financial support to black industrialists to complement the funding; and over the next 5 years, we will mobilise or commit very large sums in funding for Black industrialists and firms. Women-empowered businesses and worker empowerment must become a stronger focus. Transformation includes addressing high levels of economic concentration and helping to build stronger, agile small and medium businesses.
Sixth, on SEZs: national government will play a stronger role in improved governance, advocacy and mobilising investment. The special unit at the IDC and DBSA will assist provinces to use the R4 billion budget over the next three years more effectively on SEZs and industrial parks. We must nurture township and rural enterprises, and diversify the economic centres across our country.
Conclusion
Covid-19 has exposed the fragility in the global economy.
The quest for competitiveness must be balanced with the need to nurture economic resilience, the ability of economies to respond to risks that an open and integrated world present: be they to digital systems, or from climate change, or to food security or the spillover of trade wars raging elsewhere, or indeed from pandemics.
Africa must grasp this opportunity to redefine its role in the world – to break from the post-colonial history as simply a supplier of raw materials and this crisis must provide the jolt for our efforts to industrialise.
Related News
Minister Patel briefs BRICS meeting on South Africa’s handling of the pandemic, outlining key lessons
The Minister of Trade, Industry and Competition, Mr Ebrahim Patel participated in the 10th BRICS Trade Ministers Meeting on Thursday. The Trade Ministers Meeting focused on responses to the coronavirus pandemic, the strategy for the BRICS Economic Partnership, the Multilateral Trading System and other key areas of cooperation.
Minister Patel briefed the meeting on the South African government’s response to covid-19, outlining national interventions and actions, and highlighted key lessons that government is drawing from the coronavirus crisis and how that is shaping thinking about the future. He stated that government is considering further economic measures, including significant infrastructure investment and developing greater levels of dynamism and competitiveness in domestic industry.
Minister Patel highlighted two key observations from South Africa’s experience in dealing with the pandemic.
“The first observation is that solidarity and working together is critical in fighting a pandemic. And, as the pandemic is still with us, we need to now further strengthen the solidarity between ourselves: for example in securing critical goods from each other where no local manufacturing capability currently exists; in promoting investment in each other’s economies so that economic recovery fast-tracked, and in ensuring that any future vaccine is available to developing countries at affordable prices,” said Minister Patel.
The second observation he shared with his BRICS counterparts is that the benefits of highly integrated supply-chains come with enormous vulnerabilities when they are disrupted.
“African countries are learning the hard lesson that if we are simply exporters of raw materials and importers of medication, medical equipment and other critical goods, then our ability to ensure protection of citizens in moments like these, is compromised,” Minister Patel stated.
He added that building resilient and diversified supply-chains must include building domestic manufacturing capabilities as part of building new, inclusive supply-chains.
“An inclusive supply-chain means that manufacturing capacity is diversified across countries and South Africa, and indeed the African continent, is ready to expand production for both existing product lines and new product opportunities,” he said.
“This does not entail disengaging from global trade, investment and cooperation – they remain important sources of growth and development and we will certainly need to intensify international cooperation. However, we do not think it wise or the right time to consider new binding global or plurilateral rules in haste at a time of such crisis. We need to retain flexibility to respond with all available policy tools to address the crisis and effect economic recovery,” stated Minister Patel.
In the G20 and at the World Trade Organisation, South Africa has called for a discussion on the relationship between TRIPS (the Agreement on Trade-Related Aspects of Intellectual Property Rights) and covid-19, arguing that affordable access to technology to produce critical medical supplies remains important. The South African government has argued that the provisions of the TRIPs Agreement on patents and compulsory licensing should not be barriers to sharing the technology (without royalty) to produce the medical equipment needed to address the crisis.
BRICS countries are an important trading block partner for South Africa, with exports to BRICS countries from South Africa totalling nearly R500 billion in 2019.
In the 10 years since its inception, BRICS cooperation has expanded to many areas, including economy, trade, finance, business, agriculture, education, health, science and technology, culture, think tanks, and friendship cities.
Related News
tralac’s Daily News Selection
The 10th BRICS Trade Ministers Meeting takes place today. On the agenda: responses to the corona virus outbreak, the strategy for BRICS Economic Partnership 2025, the Multilateral Trading System and other key areas of cooperation.
Mills Soko, Mzukisi Qobo: Why one of three African candidates fits the bill as the new head of the WTO (The Conversation)
Okonjo-Iweala does not have WTO experience. But she knows and understands the workings of multilateral institutions, honed over many years as an international public servant. She is a seasoned global finance expert, economist and development practitioner with decades of international experience. Her global finance expertise, in particular, would serve the WTO well given the nexus between trade and finance in the world economy, accentuated by the current economic crisis. By not being a WTO insider, she would bring a much-needed fresh perspective to the institution.
EAC Partner States adopt import duty measures to boost local production amidst COVID-19 pandemic (EAC)
EAC Partner States (Burundi, Kenya, Rwanda, Tanzania, Uganda) have adopted various measures on EAC Common External Tariff with the aim of boosting local production in the region. The new import tax changes will be effective in the new fiscal year which commences on 1 July 2020 after being approved during the Pre-Budget Consultations of the Ministers/Cabinet Secretary of Finance that was held via video conference on 13th May 2020. The EAC Ministers have been holding the Pre-budget Consultations prior to reading the National budgets as a way of harmonizing fiscal measures in the region. The decisions of the Ministers/Cabinet Secretary for Finance on the CET measures were finally endorsed by the meeting of the Sectoral Council on Trade, Industry, Finance and Investment on 3 June 2020 via video conference.
The import duty measures in the EAC Gazette issued on 30 June 2020 can be put into three main categories which are Duty Remission for Industrial Inputs, Stays of Application, and Amendments of the East African Community Customs Management Act, 2004. The duty remission measures adopted by the EAC Partner States will ensure that local manufacturers can import raw materials and inputs which are not available in the region at a lower rate. These duty remission measures are strictly specific for the gazetted manufacturers who have applied for the importation of a specific amount of input/product at the reduced import duty rate.
Since most of EAC Partner States opted for stay of application of the EAC CET and applied higher duty rates ranging from 35% to 60%, it gives a positive indication that EAC Partner States may soon conclude the comprehensive review of EAC CET as countries have shown some commonalities on the maximum tariff or the level of protection they require. In addition, the ranges of CET measures contained in the EAC Gazette are in line with the EABC Budget Proposals which were submitted to the EAC Secretariat. All EABC customs proposals on duty remission and stay of applications were adopted by EAC Partner States at different degrees/levels. [Note: Various downloads available]
Kenya: Diaspora disappointed by Kenya Airways’ cancellation of US flights (Daily Nation)
Kenyans living in the US and Canada say they are disappointed by news that Kenya Airways plans to drop direct flights to the US and China when it resumes international routes on August 1. It was reported this week that the national carrier would be forced to cut the routes it serves by half to 27 due to the devastation caused by the Covid-19 pandemic. “Trade between Kenya and the US stands at only $1bn. This flight cancellation undermines the ongoing bilateral free trade agreement being negotiated between the US and Kenya to grow the volume of value added exports from Kenya into US markets” said Prof David Onsarigo Monda of City University, New York. Prof Monda says the cancellation will likely hurt the horticulture sector and Kenya’s tourism industry. “Diplomatically, the flight cancelation disrupts direct access to two major global diplomatic centres in New York and Nairobi. New York hosts the UN headquarters while Nairobi hosts UNEP and Habitat. Kenya is also set to become a non-permanent member on the UN Security Council beginning January 2021. This flight cancellation sends all the wrong messages,” he added.
Kenya: Cash from Kenyans in America hits historic high (Business Daily)
Cash sent home by Kenyans living in North America hit a historic high of Sh15.7 billion ($145.95m) in May, defying the tough economic situation facing workers in the region since the Covid-19 pandemic struck. Data from the Central Bank of Kenya shows the remittances from the region, which includes Canada, the United States and Mexico, rose by Sh2.5 billion (19.6%) from Sh12.76 billion ($118.71m) in April. This saw North America deepen its share of total remittances to 56.5% of the Sh27.78 billion ($258.15m) sent to Kenya in May. This is in contrast with May last year when the region accounted for 48.6% of total remittances. The CBK singled out the US as among the countries which brought in the highest remittances. However, the May remittances represented a recovery from a six-month low of Sh22.4 billion ($208.21m) recorded in April. The rise came in the period remittances from Europe also recovered from Sh3.75 billion ($34.9m) to Sh4.59 billion ($42.65m). Remittances from the rest of the world rose by 27%, to Sh7.48 billion ($69.5m)
Tanzania: M-Pesa global transfers climb 300% (The Citizen)
Vodacom Tanzania’s international money transfer service netted Sh102 billion between March and June 2020, to cement the growth in the overseas money transfer platform. International transfers jumped up by 300% in the quarter, while remittances hit Sh16 billion which is a 44% increase over the same period. Vodacom Tanzania has recently rolled out mobile money transfer services across nearly all countries. “We continued to widen our partner network, with the launch of ‘Mama Money’ and ‘Remitly’ during the quarter, which enabled customers to receive money from South Africa,” said Vodacom in a regulatory statement to the Dar es Salaam Stock Exchange.
Nigeria: 5.7% of Nigerian households receive remittances from abroad — NBS (Economic Confidential)
Nigeria received $17.57bn in direct Diaspora remittances in 2019, up by 56.4% from $11.23bn in 2018. The NBS, however, disclosed that the average remittance received per household is $224 or N84,741 while over 80% of the remittances received is spent on consumption. The NBS disclosed this in its National Living Standard Survey Report for 2018/2019. The report stated: “Large share of households, 54% report receiving remittances: 52.7% receive remittances from someone in Nigeria and 5.7% from abroad. The state of Kebbi has the largest share of household-remittance-recipients, at 81.4% and state of Sokoto has the lowest number at only 5.6%. The average value of domestic remittance is N62,492 and of international remittance is N84,741. More than 80% of households who receive remittance report using the transfers for consumption purposes.”
Tanzania’s largest bank to enter DRC in continental expansion plan (Ventures Africa)
CRDB Bank Plc plans to enter seven new countries in East and Central Africa as part of an expansion plan that began in 2012 but was put on hold four years later over financial constraints. With improved cash flows and close to $3bn worth of assets, the Tanzania lender, largest by assets and market share, has reignited its ambitious plan with hopes to join regional banking giants – Equity and Kenya Commercial Bank – in the race towards attaining pan-African status. Dar-listed CRDB has identified the Democratic Republic of Congo as the first point of entry through Greenfield Investments. A number of top East African banks have set sights on Kinshasa, which has attracted the likes of Kenya’s Equity Group and KCB.
Uganda registers trade surplus despite Covid-19 pandemic (Daily Monitor)
Despite the slowdown in international trade due to Covid-19 pandemic, the Ministry of Finance, Planning and Economic Development has revealed that Uganda recorded a trade surplus with the European Union of $0.3m (Shs118 million) and the Middle East $87.70m (Shs324 billion) in May 2020. The Ministry said in the Performance of the Economy report of July 2020 that export earnings increased by 40.4% in May 2020 to $290.93m (Shs1.07 trillion) from $207.15m (Shs765 billion) in the previous month. “This was the first time since January 2020 that exports were registering an increment, implying that the supply chain disruptions caused by the Covid-19 pandemic is starting to ease. However, in comparison with the same period last year, export earnings decreased from $349.61m (Shs1.3 trillion) in May 2019 to $ 290.93m (Shs1.07 trillion) in May 2020,” said the Ministry. They added: “The Middle East was the leading destination for Uganda’s exports accounting for 44.4% of all exports. It was followed by the EAC at 23.1% nd the European Union at 12.5%.”
However, during the under review, the Ministry said there was a reduction in exports to all trade blocs save for the Middle East where exports increased to $128.9m (Shs476 billion) in May 2020. “Earnings from export commodities such as cotton, tea, tobacco, fish, oil re-exports, base metals & products recorded drops. Nonetheless, the value of some export commodities like coffee, gold, maize and beans increased during July compared to the same month last year.” Download (pdf):
-
Figure 17 (pdf): Merchandise exports by destination, May 2019 cf May 2020
-
Figure 20: Merchandise imports by origin, May 2019 cf May 2020
Kenya: Ugandan sugar imports drop 96% (Business Daily)
Sugar imports from Uganda in June fell 96% on account of higher cost for the commodity as traders opted for cheaper alternatives from other regional countries. Data from the Sugar Directorate indicates that the volumes from Uganda fell to 43 tonnes from 1,180 tonnes in May. The cost of a tonne of sugar from Uganda was Sh64,574, compared to Sh56,463 and Sh57,129 from Malawi and Swaziland, respectively. The price of Ugandan sugar increased slightly in the review period from Sh64,420 in May. “Mill white/brown sugar from Malawi and Swaziland were the cheapest with an average price of Sh56,463 and Sh57,129 a tonne respectively. Sugar from East Africa Community, precisely from Uganda was landing at an average price of Sh64,574 per tonne,” said the directorate. [What can Uganda do with her milk surplus?]
Kenya: Taxi hailing firm Little gets Sh324m for West Africa expansion (Business Daily)
Kenyan e-hailing taxi firm Little has received a Sh323.85 million ($3m) from its parent firm for its expansion to West Africa. Little received the funds from Craft Silicon to launch operations starting with Ghana’s capital Accra, where the firm is piloting the app service. Due to current travel restrictions, the firm said it will run the pilot, training and recruitment of drivers virtually. “West Africa is a large market, and if Little have to be a key player in Africa, we need to be present there in addition to East Africa. Hence the march towards West Africa,” said Little CEO and Craft Silicon Founder, Kamal Budhabhatti.
South Africa: President Ramaphosa signs Border Management Authority Bill into law (Presidency)
The new law provides for the establishment, organisation, regulation, functions and control of the Border Management Authority, the appointment of its Commissioner and Deputy Commissioners and officials. The law also provides for their terms of office, conditions of service and functions and powers. Furthermore, the law provides for the establishment of an Inter-Ministerial Consultative Committee, Border Technical Committee and advisory committees, for the review or appeal of decisions of officers, and the definition of certain things offences and the levying of penalties. The legislation therefore contributes to the security of the country and the integrity and ease of trade and the general movement of persons and goods in and out of the country.
The Chairperson of the Portfolio Committee on Home Affairs, Adv Bongani Bongo, has welcomed the signing into law of the Border Management Authority Bill. “While we are aware that the legislation-making process has taken longer than initially intended, we are happy that the delay has strengthened the law to make the agency effective,” Adv Bongo said. The committee is also hopeful that the new border agency will move with speed to ensure that South Africa’s borders are secure. The committee has highlighted the importance of an implementation plan with targeted milestones for the Act. The committee has also urged the Department of Home Affairs and the National Treasury deliver on their commitment to conclude an implementing protocol within six months of signing of the Act to enable the seamless functioning and co-ordination of border management areas. The committee will exercise its oversight obligations by heightening it engagements with the department on the implementation of the Act.
Today’s Quick Links:
Despite oil gloom, Total rallies $14bn for Mozambique project
Kenya: IFC announces $50m loan to Equity Bank to support Kenyan SMEs during Covid-19
Nigeria’s Access Bank gets $50mln IFC loan
Implications of COVID-19 on Nigeria’s employment generation
Tanzania seizes eight flower farms abandoned by defaulters
Kenya microfinance needs to be regulated, says CEO of KBA
Middle East, SSA: IFC exceed 2019 fiscal commitments with $4.6bn invested
Related News
Amid fears of worst recession in decades, urgent calls for solidarity, a united economic front
With multilateral cooperation under strain, senior UN officials, Nobel laureates and eminent academic experts, gathered virtually on Wednesday for the launch of a new report recommending “an adjusted approach” to economic development, and a policy dialogue exploring how countries can recover from COVID-19, in ways that lead to real structural transformation.
‘Parallel threats’
“Parallel threats linked to health, economic and social crises have crippled countries and left us at a standstill,” said Liu Zhenmin, Under Secretary-General for Economic and Social Affairs (DESA), as he presented a new report by the High-level Advisory Board on Economic and Social Affairs.
Titled Recover Better: Economic and Social Challenges and Opportunities, it analyses economic trends critical to the achievement of the Sustainable Development Goals (SDGs) and recovery from COVID-19.
Among its recommendations is a greater focus on the environment, he said, as well as promotion of research and development, investment in infrastructure and education, and improvement in economic equality.
“Overcoming the crisis and getting back on track to achieve the Sustainable Development Goals will require a strengthened multilateralism,” he said. COVID-19 has laid bare how much leadership, foresight and collaboration among all Governments and stakeholders, matter.
First global poverty rise since 1998
In a video message, UN deputy chief Amina Mohammed, said as many as 100 million people are expected to be pushed back into extreme poverty in 2020 – the first rise in global poverty since 1998.
“We need all hands on deck if we are to rebuild our economies sustainably and inclusively,” she assured. Noting that the report calls for better international tax cooperation and more equitable access to digital technologies, she said the sustainable management of natural resources, and value-added approaches to trading goods, will also be critical.
The 2030 Agenda remains the agreed framework for recovering in ways that accelerate progress on climate change, poverty and gender inequality, and address the fragilities exposed or exacerbated by the pandemic. “We must all do more,” she said.
Equality, structural reform
During two policy dialogues, 12 experts wrestled with whether the world is currently in a recession and if so, what it will take to recover in ways that can thoroughly reform underlying vulnerabilities.
“There is no trade-off between economic efficiency and equality,” said Alicia Barcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), who contributed a chapter on the topic.
45 million at risk
During a panel on the theme, “Ensuring a sustainable recovery through more inclusive and strengthened multilateralism,” she underscored the urgent need for structural change. Between 2000 and 2010, 60 million people in Latin America and the Caribbean moved out of poverty. Now, 45 million risk being pulled back in.
“The market is not going to equalize society. We need a new social and political compact altogether,” she said, pointing out that Costa Rica, Uruguay and Cuba – societies that have high trust in government – have fared better during the pandemic than others.
She also called for a progressive tax system, as countries in the region have a 23 per cent tax burden, lower than those in the Organisation for Economic Cooperation and Development (OECD), as well as more regional integration. “The post-pandemic world is going to be a world of regions, a world of blocs.”
Ricardo Lagos, former President of Chile, suggested the creation of an internationally binding agreement on pandemics, forged under the auspices of the World Health Organization (WHO).
Europe’s social contract
Along similar lines, Marcel Fratzscher of research institute DIW Berlin, said that on 21 July, European countries agreed to establish a €750 billion ($850 billion) recovery fund, transferring resources from stronger to weaker countries with the goal of rebuilding Europe.
“There is an institutional framework being put into place that could ultimately lead to fiscal union help strengthen capital market union,” he said.
Trade Woes
Others drew attention to the significant drop in global trade, which Merit Janow, Dean of Columbia University’s School of International and Public Affairs, said was occurring in the context of growing nationalism, geopolitical tensions and strain around multilateral institutions – all of which underscores the vulnerability of global supply chains.
The first priority should be to keep the global trading system open, she said. Practical, problem-solving approaches will be needed, which countries might undertake regionally or through “coalitions of the willing”. She pointed out that when the World Trade Organization appellate body disbanded, a cluster of countries agreed on arbitration for some purposes.
Africa needs 4 million teachers
In a second discussion on “Assessing the state of the global economy and recovery pathways,” Cristina Duarte, the Secretary-General’s Special Adviser on Africa, who is the former Minister of Finance, Planning and Public Administration of Cabo Verde, said that for Africa, recovering better requires a look at why, after 25 years of uninterrupted growth, systems are still lacking.
She said Africa must mobilize itself – beyond emergency solutions – to understand the nature and quality of economic growth. The continent was not socially inclusive before the pandemic hit, lacking jobs for 60 per cent of its young people.
She said Africa needs 4 million more teachers and a further 1 to 2 million health professionals – and importantly – to break away from ideas that equate poverty management with development management. Income redistribution, rather than economic growth, must be at the centre of all recovery strategies.
Heizo Takenaka of Toyo University, said Japan’s experience with COVID-19 revealed the need to carefully consider the governance systems in place during an emergency. “We should be very careful about the possibility of asset inflation from here on, considering that monetary authorities are applying a huge amount of money in many countries.”
Historical lens
Broadly speaking, Nobel economist Joseph Stiglitz said that at a moment when more global cooperation is badly needed, strong forces are fraying the global economy.
While the “Trump-kind of protectionism” will go by the wayside, he argued, the deeper problem is that supply chains have not been resilient and instead made countries more vulnerable.
He described the disappearance of optimism prevailing after the US-Soviet Cold War era, that countries were converging around liberal democratic models and free-market economies.
Under the turmoil of COVID-19, authoritarianism is now flourishing in some parts of the world, which has led to a split among nations.
“Post-COVID-19, the world is going to have a very different architecture, no matter who is in the White House, no matter what is going on around the world,” he explained.
Worse than the Great Depression?
He said the global economic downturn will be the worst since the Great Depression of the 1930s – and in many dimensions, worse than that seismic failure of the global system. “We should use the massive amount of Government intervention in countries… to create a new world that is more in accordance with our views of what our societies should be.”
Countries that have done well, he said, have high trust in Government, high social solidarity, an understanding of the externalities associated with disease spread, and trust in science.
“Forty years of denigrating the role of the State means that in some countries, the State was not able perform a role that was essential,” he added.
Related News
EAC Partner States adopt import duty measures to boost local production amidst COVID-19 pandemic
EAC Partner States, i.e. Burundi, Kenya, Rwanda, Tanzania and Uganda, have adopted various measures on EAC Common External Tariff (CET) with the aim of boosting local production in the region. The new import tax changes will be effective in the new fiscal year which commences on 1st July 2020 after being approved during the Pre-Budget Consultations of the Ministers/Cabinet Secretary of Finance that was held via video conference on 13th May 2020.
The EAC Ministers have been holding the Pre-budget Consultations prior to reading the National budgets as a way of harmonizing fiscal measures in the region. The decisions of the Ministers/Cabinet Secretary for Finance on the CET measures were finally endorsed by the meeting of the Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) on 3rd June 2020 via video conference.
The import duty measures in the EAC Gazette which was issued on 30th June 2020 can be put into three main categories which are Duty Remission for Industrial Inputs, Stays of Application, and Amendments of the East African Community Customs Management Act, 2004.
The duty remission measures adopted by the EAC Partner States will ensure that local manufacturers can import raw materials and inputs which are not available in the region at a lower rate. These duty remission measures are strictly specific for the gazetted manufacturers who have applied for the importation of a specific amount of input/product at the reduced import duty rate.
The Stays of Application measures that are instituted on final products are reported in two scenarios. First, where EAC Partner States agreed to stay application of the EAC CET rate and apply a higher duty rate for the imported products. The second scenario is where EAC Partner States agreed to stay application of the EAC CET rate and apply a lower duty rate for imported products.
The decisions by the EAC Partner States to stay application of the EAC CET rate and apply a higher duty rate are aiming at stimulating local production by safeguarding manufacturing of that particular product against similar cheap imports. Some of the products include textile (garments) and textile products; leather (shoes) and leather products; edible oil; tiles, processed tea; coffee & cocoa; meat & meat products; and steel articles, iron & metal products.
The decision by EAC Partner States to stay application of the EAC CET Rate and apply a lower duty rate was informed by the fact that the region has no sufficient capacity to produce that particular product hence the need to protect East Africans against a higher import duty. This second scenario of stay of application was applied to a few products such as mobile phones, rice in the husk, semi milled or wholly milled rice, sugar, wheat, and barley.
Analysis indicates that the existence of the Stays of Application and Country’s Specific Duty Remission in the current EAC Gazette aims at cushioning vulnerable sectors/products, protect local industries as well as enhance local manufacturing and production for those products that the EAC region has the capacity to produce.
Since most of EAC Partner States opted for stay of application of the EAC CET and applied higher duty rates ranging from 35% to 60%, it gives a positive indication that EAC Partner States may soon conclude the comprehensive review of EAC CET as countries have shown some commonalities on the maximum tariff or the level of protection they require. In addition, the ranges of CET measures contained in the EAC Gazette are in line with the EABC Budget Proposals which were submitted to the EAC Secretariat. All EABC customs proposals on duty remission and stay of applications were adopted by EAC Partner States at different degrees/levels.
However, one of the critical challenges arising from the existence of numerous Stays of Application and Country’s Duty Remission is an impediment to the intra-EAC trade as the finished products that benefit from these measures cannot access the regional market at preferential tariff treatment. This is due to the fact that all finished products which benefit from the Country’s Duty Remission once sold in the EAC customs territory shall attract duties, levies and other charges provided in the EAC CET. Furthermore, these measures erode the EAC CET as a uniform policy against imported products into EAC market. To address this critical challenge, EABC urges the EAC Partner States to fast track the finalization of the comprehensive review of the EAC CET so that all countries can uniformly apply the new agreed CET.
The EAC CET is considered as a very important instrument of EAC Customs Protocol as it reflects the trade relations between EAC Partner States and the Rest of the World (RoW) with regards to the import duties charged on imported products into the Community. The implementation of the EAC CET commenced in 2005 after the EAC Customs Union Protocol came into force. The EAC CET is currently structured under three bands of 25% for finished goods, 10% for intermediate goods and 0% for raw materials and capital goods. In addition, there are a limited number of products under the sensitive list that attract rates above the maximum rate of 25% whereby they range from 35% to 100%.
Related News
tralac’s Daily News Selection
Diarise: 27 July. Leading the way: How Africa is establishing a 21st century trade agenda
This event will introduce the new World Bank Group report: The African Continental Free Trade Area: economic and distributional effects. The report is designed to help countries implement policies that can maximize the agreement’s potential gains while minimizing risks. Through a discussion moderated by Albert Zeufack, World Bank Chief Economist for Africa, a series of speakers (including tralac’s Trudi Hartzenberg) will discuss the economics behind the trade agreement and how policymakers can use the AfCFTA to increase competition and prepare their workforces to take advantage of new opportunities.
tralac Blog, by Dirk de Vos, Trudi Hartzenberg: The looming Brexit cliff – what it means for South Africa and for SACU
Even after the UK leaves, the EU as a block remains South Africa’s most important trade relationship. The UK, on its own, is South Africa’s second biggest export destination after China. Our exporters will need to immediately develop plans to minimise the almost certain disruptions to existing logistical arrangements. For all this, there are potential upsides. South Africa should press the UK to reduce technical barriers to trade for South African exporters. If the UK is no longer a participant in the EU’s common agricultural policies that protect EU farmers, why retain the cumbersome VI-1 form for South African wines?
While the UK carved out the zero and low tariff quotas in its trade deal with SACU+M, South African exporters could exploit market opportunities in the rest of the EU since the quotas for South African exports in the free trade agreement with the EU remain in place. How about something more entrepreneurial? The South African freight forwarding sector has lots of experience getting goods into and out of the EU. Freight forwarding is a relentless enterprise, and the industry in South Africa is experiencing a serious COVID-19 downturn. But it has exactly the skills and experience that the UK freight forwarding sector will be needing. Much of the preparatory work in this value chain can be done remotely and South Africa has the advantage of being in the same time zone. This could be an excellent business process outsourcing opportunity.
Medical industries in Africa: a regional response to supply shortages (ITC)
Africa can position itself strategically and develop a regional response to avoid healthcare product shortages similar to those triggered by the COVID-19 crisis. That’s the main message of Medical Industries in Africa: A Regional Response to Supply Shortages, a new International Trade Centre report. Today, Africa sources only 8% of its health-related products from African suppliers. The continent can become competitive in some of these items while combating the crisis and building its own resilience to future pandemics, the ITC report finds. The report urges policymakers to consider regional suppliers with export growth potential. Diversifying would reduce the impact of export restrictions on essential goods and make the continent less dependent on just a handful of foreign suppliers. Egypt, Ghana and South Africa are viable alternatives for products such as disinfectants and adhesive bandages. Governments also should help build up Africa’s capacity to produce key medical supplies by developing regional value chains, the report says. Extract (pdf): The African Continental Free Trade Agreement has a role to play.
Differences between the average tariffs charged to African and to non-African suppliers of medical products are often small (Figure 3). The average tariff rate for disinfectants from African suppliers is 7.1%, while imports from outside Africa face an average tariff level of 8.8%. The average tariff on highly concentrated ethanol – the main ingredient in disinfectants – is 14.2% for intra-African trade and 16.7% for extra-African imports. Likewise, the average tariff applied to imports of surgical gloves from African suppliers is 5%, marginally lower than the 5.2% tariff charged to non-African suppliers. For filtered masks, African suppliers enjoy just a slightly more attractive average tariff (2.9% versus 3.3% for non-African suppliers).
Evidence from ITC business surveys on non-tariff measures suggests that trade-related regulations disproportionately affect intra-African trade. While African countries export just 32% of their medical products to African markets, they are responsible for 72% of the burdensome non-tariff measures faced by African exporters. Most challenges when exporting to Africa stem from rules of origin that make it difficult for companies to benefit even from the small tariff advantages they enjoy today on African markets. The African Continental Free Trade Agreement therefore has a vital role to play. Tariff cuts and trade facilitation measures to support the free flow of health products and their ingredients regionally will be an important step in supporting regional value chains in selected medical products. Such measures will help build the continent’s resilience to global health crises and diversify the global supply. It remains important for AfCFTA negotiations and implementation to prioritize these aspects. In the interim, the regional integration organizations must consolidate efforts and serve as building blocks for the AfCFTA.
Recovering better: Economic and social challenges and opportunities (UNDESA)
With multilateral cooperation under strain, senior UN officials, Nobel laureates and eminent academic experts, gathered virtually on Wednesday for the launch of a new report recommending “an adjusted approach” to economic development, and a policy dialogue exploring how countries can recover from COVID-19, in ways that lead to real structural transformation. “Parallel threats linked to health, economic and social crises have crippled countries and left us at a standstill”, said Liu Zhenmin, Under Secretary-General for Economic and Social Affairs, as he presented a new report by the High-level Advisory Board on Economic and Social Affairs. Broadly speaking, Nobel economist Joseph Stiglitz said that at a moment when more global cooperation is badly needed, strong forces are fraying the global economy. While the “Trump-kind of protectionism” will go by the wayside, he argued, the deeper problem is that supply chains have not been resilient and instead made countries more vulnerable. He described the disappearance of optimism prevailing after the US-Soviet Cold War era, that countries were converging around liberal democratic models and free-market economies. Under the turmoil of COVID-19, authoritarianism is now flourishing in some parts of the world, which has led to a split among nations. “Post-COVID-19, the world is going to have a very different architecture, no matter who is in the White House, no matter what is going on around the world”, he explained.
Extracts from Chapter IV (written by Ms Christina Duarte): Sustainable financing for (an owned) sustainable development: time for Africa to give the driver’s seat to domestic resource mobilization (pdf)
The question therefore is: “What should African policymakers do in order to substantially increase domestic development financing over a sustained period of time?”
First, African policymakers should be conscious of the following: Sustainable financing is not the ability to issue Eurobonds every two to four years and get them oversubscribed by international financial markets due to positive outlooks by Standard and Poor’s. Development finance is not a technical problem; it is not a question of creating or adopting innovative financing mechanisms proposed by investment banks. Development finance is essentially a political and strategic challenge. Independent of technical solutions, policymakers must have a consistent political commitment and take a long-term strategic approach.
Second, African policymakers must understand that development cannot be outsourced and proceed accordingly. African leadership must lead effectively and, in order to lead, must exercise ownership to build the necessary and indispensable institutions for domestic resource mobilization—a challenge that requires vision, strong institutions, accountability and transparency.
Third, Africa’s development environment has the key elements or fundamentals to support a robust drive to mobilize domestic resources. The Addis Ababa Action Agenda accurately states that domestic resource mobilization is first and foremost generated by economic growth. But, in the case of Africa, such a statement cannot be adopted as a starting point for DRM policies; it might push for a “let’s grow first and mobilize internal resources later” approach. With high informal economies and huge illicit financial outflows, this approach might take policymaking in the wrong direction.
Figure IV.2: Achieving sustainable finance for sustainable development in Africa also demands an intangible dimension: developmental institutions.
COVID-19 is fuelling acceleration in digital transformation in Africa (ECA)
The world is increasingly going digital but much still need to be done on the continent to increase internet penetration. According to the International Telecommunication Union, in 2019 only 28 per cent of Africans used the internet and online shoppers are relatively still few. Experts say that in the wake of COVID-19, there is an urgent need for African enterprises to digitalize and tap into enormous opportunities offered by e-commerce. For example, Kenya, Mauritius, Namibia and South Africa are the only countries where the share of online shoppers exceeds 8 per cent. In most other countries, it is below 5 per cent. Ms Mama Keita, Director of UN Economic Commission for Africa in Eastern Africa says that the COVID-19 pandemic changed the way we do business, and this should be an accelerator for digital transformation. Sectors like education, health, trade, food delivery, events and conferencing experienced unprecedented demand for technology. Ms Keita was speaking in a virtual dialogue on how women digital entrepreneurs are contributing to the region’s digital transformation. She stressed how COVID-19 crisis and containment measures have upended almost every aspect of life, affecting big and small enterprises, disrupting supply chains, causing the decline of export revenues and interrupting the tourism, transport and logistic sectors significantly.
Adding fuel to the fire: Cheap oil during the COVID-19 pandemic (World Bank)
Oil prices have plummeted, recording their largest one-month fall on record in March 2020. By one measure, the European Brent spot price, the oil price fell by 85% between January 22, when the first human-to-human transmission of COVID-19 was announced, and its trough on April 21—more than at the height of the global financial crisis (70% from end-August to late December 2008) and more than the plunge during the whole period of end-June 2014 to midJanuary 2016 (77%). The West Texas Intermediate oil price fell into negative territory on April 20. 2 Since then, Brent oil prices have regained some ground but, at around $30 per barrel on average in the first three weeks of May, remain less than half their January average and around the January 2016 trough of the oil price slide of 2014-16. Against this background, this paper examines the likely implications of the 2020 oil price plunge by putting it in a historical context and drawing lessons from the experience of emerging market and developing economy energy exporters and importers during the 2014-16 plunge (refer to Appendix 1 for country classification). Specifically, the paper addresses the following questions: First, what has been the source of the 2020 oil price collapse? Second, how does it compare with earlier episodes? Third, how will low oil prices likely affect the eventual recovery of EMDE energy exporters and importers?
Mukhisa Kituyi, Dona Bertarelli: Why a sustainable blue recovery is needed (UNCTAD)
The world’s seventh largest economy based on GDP doesn’t belong to a single country, and isn’t even on land, yet it’s valued at around $3 trillion annually, and supports the livelihoods of more than 3 billion people. It’s the ocean. Worryingly, the ocean and the blue economy it supports are not only in severe decline, the current mode of operating is no longer sustainable. The UN Decade of Ocean Science, which starts next year, will be an opportunity to maximise the benefits of effective science-based management of our ocean space and resources.
Decarbonizing shipping. International shipping and coastal transport can reduce their carbon dioxide emissions by investing in low-carbon technologies and operations, reducing pollution and promoting greater digitalization for better monitoring, energy efficiency and lower emissions. New technologies and satellite data can combine data sources that are enabling unprecedented insights into the ocean, in terms of mapping, surveillance and enforcement. Such transparency is uncovering more than illegal, unreported and unregulated (IUU) fishing. We now have insights into the economics of fishing on the high seas, the relationship between IUU fishing and bonded labour and where to best establish marine reserves, and the capacity to provide data for enforcement.
Deploying blue finance and marine-based research. Innovative financial instruments such as blue bonds and blended financing are needed to fund the shift towards more sustainable ocean sectors. For instance, in 2019, Morgan Stanley, working with the World Bank, sold $10 million worth of blue bonds with of the aim solving the challenge of plastic waste pollution in oceans. Investment in applied marine-based research, development and knowledge sharing should also be increased. To this end, UNCTAD has established regional centres of excellence with partner institutions in Vietnam and Mauritius, enabling the sharing of experiences, technical knowledge and fisheries’ inputs. SIDS and coastal communities are vital to preserving the ocean and will need global support to conserve and develop a blue economy that benefits not only local populations but humanity as a whole. Longer-term, countries around the world need to expand ocean and sustainable blue economy literacy, especially among vulnerable populations, and increase understanding of gender considerations. We need more individual and collective action if we are to build a sustainable blue economy that leads to prosperity for all.
Developing countries pay environmental cost of electric car batteries (UNCTAD)
Global consumers are warming up to electric cars, whose sales are expected to jump from 3 million vehicles in 2017 to 23 million in 2030, according to the International Energy Agency. Similar growth is expected for rechargeable batteries, with the market for cathode – the positive electrode of the lithium-ion battery – forecast to reach $58 billion in 2024, up from an estimated $7 billion in 2018. While this is great news for efforts to cut greenhouse gas emissions, an UNCTAD report says the expected boom in mining for the raw materials used to make rechargeable batteries raises environmental and social concerns that must be urgently addressed. “Most consumers are only aware of the ‘clean’ aspects of electric vehicles,” says Pamela Coke-Hamilton, UNCTAD’s director of international trade. “The dirty aspects of the production process are out of sight.” This is because while most of the consumers live in industrialized nations, the lion’s share of the raw materials is concentrated in a few developing countries. Nearly 50% of world cobalt reserves are in the Democratic Republic of the Congo, which accounts for over two-thirds of global production of the mineral. About 20% of cobalt sourced from the central African nation comes from artisanal mines, where some 40,000 children work in extremely dangerous conditions, according to UNICEF, the UN’s children’s agency. Commodities at a glance: Special issue on strategic battery raw materials (pdf).
The report is divided into six chapters. The first chapter discusses the different types of rechargeable batteries, their performance and chemistries. The second chapter presents an overview of the selected battery raw materials considered in this report. The third chapter discusses the upstream and downstream value chains of the LIB. The fourth chapter discusses supply, demand with respect to production and consumption, and price evolution of the selected raw materials used in LIBs. The fifth chapter discusses the social and environment effects related to exploitation of the selected battery raw materials discussed in this report. The final chapter draws some policy implications from the report.
Evolving to work better together: public-private partnerships for digital payments (IMF)
Public-private partnerships look good on paper. But if we’re serious about them, we — the central bankers and regulators of the world — have to shift our focus to market design and contestability, firm entry and exit, anti-trust, and business model viability. Perhaps we must learn to be a little more agile, a little more open to change. And you — the innovators — have to learn about safety, resilience, stability, and policy objectives. These might constrain your products, and might require longer development times — but for good reason. I will focus on public-private partnerships to provide central bank digital currency — CBDC. The goal of these partnerships is to preserve comparative advantages: for the private sector to interface with customers and innovate, and for the public sector to regulate, supervise, and ultimately provide trust.
In so doing, I cannot emphasize too strongly the importance of regulatory clarity and consistency — domestically and internationally — to encourage innovation. Note that public-private partnerships are not new, even for the provision of money. Cash is designed by central banks but distributed by commercial banks. And most of the money we use — in the form of commercial bank deposits — is created by the private sector; is a private liability; and is settled in great part through private clearinghouses, all under the strict supervision of the central bank. So what would a public-private partnership look like for the provision of CBDC? Two models stand out. [A speech by Tobias Adrian (director of the IMF’s Monetary and Capital Markets Department) delivered at the “Building CBDC: A Race To Reality” conference]
Related News
COVID-19 is fuelling acceleration in digital transformation in Africa
The world is increasingly going digital but much still need to be done on the continent to increase internet penetration. According to the International Telecommunication Union, in 2019 only 28 per cent of Africans used the internet and online shoppers are relatively still few.
Experts say that in the wake of COVID-19, there is an urgent need for African enterprises to digitalize and tap into enormous opportunities offered by e-commerce.
For example, Kenya, Mauritius, Namibia and South Africa are the only countries where the share of online shoppers exceeds 8 per cent. In most other countries, it is below 5 per cent.
Ms Mama Keita, Director of UN Economic Commission for Africa (ECA) in Eastern Africa says that the COVID-19 pandemic changed the way we do business, and this should be an accelerator for digital transformation. Sectors like education, health, trade, food delivery, events and conferencing experienced unprecedented demand for technology.
Ms Keita was speaking in a virtual dialogue on how women digital entrepreneurs are contributing to the region's digital transformation. She stressed how COVID-19 crisis and containment measures have upended almost every aspect of life, affecting big and small enterprises, disrupting supply chains, causing the decline of export revenues and interrupting the tourism, transport and logistic sectors significantly.
Ms Keita who explained the Socioeconomic Effects of the pandemic in Africa said that Africa’s projected GDP growth of 3.2 per cent for 2020 is now expected to be a sharp contraction. She, however, noted that East Africa’s economic growth, although highly impacted too, is expected to remain the largest in Africa. “COVID-19 pandemic should be used as a game-changer. It should serve as a wakeup call underscoring the urgency to turn Africa’s structural vulnerabilities into opportunities,” she noted.
Ms Keita said that the overreliance on imports from the Rest of the World of essential goods such as medical, pharmaceutical and food items, should be reduced considerably and gradually be replaced with local production. “This a great occasion to promote industrialization and structural transformation”.
She recalled the urgency of implementing the African Continental Free Trade Agreement (AfCFTA). “The rapid implementation of the agreement could fast-track the industrial development of the continent and render it more resilient to shocks such as the COVID 19 pandemic,” said Ms Keita, adding that digital transformation has a significant role to play in this process, just as digital solutions are helping mitigate the impacts of COVID at the moment.
Also speaking at the event, Ms Clarisse Ilibagiza, entrepreneur and founder of HEHE Ltd, a company that develops mobile technologies in Rwanda spoke on the necessity to build a conducive business environment. She called for policymakers to ensure that women entrepreneurs are supported and can build both the network and resilience they need to thrive in the digital economy in a post-coronavirus context.
The online dialogue event was organized by UNCTAD and provided a platform for women founders of digital businesses from Kenya, Rwanda, Tanzania and Uganda, to reflect the dynamism and variety of the digital landscape in the region.
Related News
tralac’s Daily News Selection
Diarise:
-
SA and the IMF: The IMF’s executive board will meet on Monday, 27 July, to consider South Africa’s request for a Covid-19 response loan.
-
AfCFTA negotiations update: The African Union Commission will convene a meeting of senior trade officials on Tuesday, 28 July, to receive the report of the chief negotiators and to provide guidance on the way forward for the virtual meetings.
-
Nigeria and the AfCFTA: The Manufacturers Association of Nigeria will host a webinar, AfCFTA Rules of Origin: implications for growth of the manufacturing sector, on Wednesday 29 July. (See more below)
-
The USA and Africa: President Trump plans to host African heads of state at the White House in September for an investment event.
2020 ICC Global Survey on Trade Finance
The International Chamber of Commerce’s 11th annual Global Survey on Trade Finance reveals that banks are optimistic about the evolving nature of trade finance, though unsurprisingly expect various industry-wide challenges and disruption as a result of the COVID-19 pandemic. SCF and digital trade are confirmed as key growth priorities for banks, with 86% and 84% of respective respondents calling them an ‘immediate or near-future priority’. However, there is a divide between global and non-global banks on their supply chain finance offerings and investments in digitalisation. Some 64% of global banks surveyed currently offer SCF platforms, compared to just 13% of local banks and 38% of regional banks. Similarly, while 83% of global banks have a digital strategy, only 46% of local banks report having one – highlighting a growing gap between players of different scale and reach.
Meanwhile, to quantify the likely impact of the pandemic on the trade finance industry, the report contains results from two additional projects. The first is analysis from BCG to model scenarios on how COVID-19 could disrupt trade, suggesting that trade flow values could fall by anywhere between 11% and 30% in 2020. Findings also indicate that the longer any lockdowns persist, the more severe the global and systemic impact will be, as businesses of all sizes – domestic and international in nature – fight to meet financial and commercial obligations and to remain viable. ICC also conducted a supplementary COVID-19 survey to understand banks’ sentiment regarding the initial impact of the pandemic on trade finance, with banks across geographies reporting an average 0-10% decrease in their trade flows in the first quarter of 2020, and most expecting at least a 20-30% decline for the full year.
“Nigeria can make $65bn revenue from the AfCFTA in 10 years” (Daily Trust)
The Nigerian economy can benefit up to $65bn in revenue from the optimization of the AfCFTA in the next 10 years. Mr Francis Anatogu, the Executive Secretary, the National Action Committee on Africa Continental Free Trade Area Agreement, stated this on Monday during a virtual press briefing on the activities of the Committee. He said whilst the exact projections for what Nigeria might benefit from the deal is still being worked out, Nigeria could earn up to 10% of the African export market share: “What I can tell you is that Africa on an annual basis imports goods from the rest of the world worth about $540bn per annum. They also import services worth about $140bn or $150bn per annum. So that is the size of the market we are targeting. Obviously Nigeria will take a significant percentage of that market. Our estimation is that Nigeria will take a tangible percentage of that market.”
He explained that “if altogether Nigeria gets 10% of Africa’s market worth $650bn of the market share per annum, then we are targeting $65bn in trade for Nigeria per annum” he said. “Can that be achieved over 5 years period? Most likely not, but it is something we can aim to achieve by 2030 when we achieve full liberalization. But like I said this is work in progress, the projections will become apparent in about a month or two.”
SADC Macroeconomic Peer Review Panel: extracts from the communiqué (SADC)
The purpose of the Panel’s Virtual Meeting (pdf) was to review progress made by individual Member States towards the achievement of agreed SADC Macroeconomic Convergence targets as well as to identify risks to the Region’s economic outlook and devise policy measures to mitigate the risks. In this regard, the Panel also considered a report on the impact of the COVID-19 pandemic on Member States’ performance against MEC targets. The Panel also considered peer review reports on the Democratic Republic of Congo and the United Republic of Tanzania, being the second time that the two Member States have been peer reviewed since the SADC Macroeconomic Peer Review Mechanism was launched in May 2013 in Maputo. The Panel commended the Kingdom of Eswatini and Mozambique, and Madagascar for undertaking the peer reviews for the United Republic of Tanzania and the Democratic Republic of Congo, respectively. The Panel agreed that Angola, Namibia and Zimbabwe be the next member states to be peer reviewed during 2020/2021.
COMESA’s Digital Trade Facilitation programme: update
COMESA has developed an online portal to be used by Member States to exchange information on availability of essential products within the region. This is in response to a directive issued by the COMESA Council of Ministers in May this year to develop the platform to support regional trade, during the Covid-19 pandemic. Secretary General Ms. Chileshe Kapwepwe launched the prototype platform to representatives of Member States, during a virtual meeting earlier today. The focal points will coordinate with the private sector in populating the platform with information on essential supplies. This is expected to boost local production and address shortages in supply from outside the region. Ms. Kapwepwe said the platform will enable Member States to share information on availability of products and their potential to produce and supply all different types of goods. It will connect buyers to suppliers of essential goods thereby promoting and fostering regional intra-COMESA trade.
Emmanuel Okogba: Resolving Nigeria-Ghana trade disputes (Vanguard)
It is cheering news that the hundreds of Nigerian-owned businesses shut in Ghana are being reopened after over six months of closure. This might be part of a gradual easing of months-long tensions between the two West African Anglophone countries over trade disputes and a diplomatic spat, with Ghana more on the offensive. These culminated in telephone calls between President Muhammadu Buhari and Ghana’s Nana Akuffo-Addo. Ghanaian state officials and the Ghana Union of Traders Associations have been systematically harassing and closing businesses and shops belonging to Nigerians in Ghana over alleged ineligibility to operate in the country. Under Ghanaian law, any foreign-owned business that does not have evidence of at least $300,000 in its deposit account or goods worth that amount cannot operate in that country.
The law was made at the instance of indigenous traders who complained that Nigerians were unfairly dominating the small-scale trading turf in Ghana. The Ghana Investment Promotion Centre, GIPC, Act was made apparently to protect the primary interests of Ghanaians. However, the National Association of Nigerian Traders, NANT, insists that their activities are protected by the Economic Community of West African States, ECOWAS, Protocol on Free Movement of Goods and Persons. The situation worsened after the August 2019 closure of land borders by the Nigerian government over smuggling and security challenges. Ghanaian traders and manufacturers complained bitterly that hundreds of truckloads of goods meant for the Nigerian market were “seized” in Nigeria due to the closure and retaliated by shutting Nigerian businesses. The main issue here is the conflict between the protection of national interests and the welfare of citizens which clashes with the ideals of sub-regional cooperation for the economic and social benefits of all within the region.
UNCTAD’s new online NTM training course: managing non-tariff measures amid COVID-19
To help countries better respond to the pandemic, with policies that don’t hinder trade, UNCTAD has trained 207 trade experts from 67 countries on NTMs, with 156 trainees – 86 men and 70 women – successfully completing a new online course. The training (15 June to 10 July) covered the objectives and implications of NTMs, formed part of UNCTAD’s ongoing efforts to help developing countries alleviate the socio-economic impacts of COVID-19. Over 85% of the participants said the training deepened their knowledge on NTMs, while 76% of them noted that it helped them better understand the policy issues faced by their countries in international trade. “The part most relevant to my work was the information on the analysis tool,” said Ahmed Abdelmaksoud, an Egyptian customs and international trade senior manager, referring to the UNCTAD Trade Analysis Information System. The system provides information on the NTMs applied by more than 190 countries. The online course also covered the connection between NTMs and the UN Sustainable Development Goals.
COVID-19 revenue administration implications: potential tax administration and customs measures to respond to the crisis (World Bank)
This note brings together the thinking that is occurring in global and regional teams on governance and institutional approaches to dealing with Coronavirus 2019 (COVID-19), with a focus on revenue administrations. It presents the governance and institutional reforms that can support revenue administration responses to COVID-19. The pandemic will bring a new normal where work practices should change. Usually, shocks trigger responses, and one of the responses here can be automatization of tax and customs services over the medium term, and a massive acceleration in the use of digital and virtual technologies.
Chantal Line Carpentier, Katrin Kuhlmann: Trade policy can ensure inclusive prosperity in wake of COVID-19 (UNCTAD)
We propose a new approach in three areas so trade can be a true engine for sustainable development and is:
-
better aligned with the economic and social development priorities and environmental commitments in the SDGs, the Paris Agreement, and the Sendai Framework for Disaster Risk Reduction
-
developed and implemented through more transparent and participatory processes
-
differentiated and tailored to countries’ specific needs.
Substantively, the new model we propose would mean reassessing trade rules in terms of their ability to advance economic, social and environmental dimensions of the SDGs and other international efforts, macroeconomic policies, business and human rights principles, and a balanced approach to the rule of law. This would build on existing models such as the AfCFTA that highlights a new approach to trade and development and aligns with the SDGs. It would include a stronger focus on trade and global health in line with SDG 3 (on good health and wellbeing) and development of a comprehensive food security and trade approach to deliver on SDG 2 (on ensuring zero hunger). Strengthened labour provisions will also be needed to advance SDG 8 (on decent work and economic growth). Further, it would entail meaningful initiatives on reduced inequalities (SDG 10), gender equality (SDG 5), and micro, small and medium-sized enterprises (MSMEs). In addition, it would call for a serious approach to trade and climate change, sustainability and the circular economy in support of SDGs 12 to 15. [Note: The full text of the original analysis can be accessed here]
Dorothy Tembo: Redesigning global supply chains post-Covid lockdowns (The Hindu)
What are the lessons that we can learn from the Great Lockdown? Third, the importance of supply chains in international trade means that their resilience will matter significantly for the future of trade. Lead firms often have a significant role in directing supply chains, making decisions about production practices, branding, sourcing and sales. ITC supports multiagency and partner platforms that advocate for stronger partnerships between major buyers and suppliers — and a fairer distribution of risks between different players. For example, brands and retailers could commit to a range of actions to limit the deleterious effects of Covid-19 and any future crises on their supply chains, including:
-
Paying manufacturers for finished goods and goods in production; and maintaining quick and effective open lines of communication with supply-chain partners about the status of business operations and future planning
-
Resilient supply chains can transmit knowledge, provide stability and generate agility. There are proposals on linking supply-chain players to the multilateral trading system, for instance, by creating supply-chain councils. The post-pandemic period presents a unique opportunity to embrace new concepts, fields of work and partnerships. Implementing some of these proposals could strengthen the multilateral trading system and help it regain its power to build prosperity in a changed world and achieve the United Nations Sustainable Development Goals.
Addressing heads of WTO member delegations for the last time as Chair of the Trade Negotiations Committee, Director-General Roberto Azevêdo emphasized that the year ahead would be a defining one for the WTO. The Twelfth Ministerial Conference (MC12), now postponed to 2021, would be a key milestone for members’ efforts. “As originally scheduled for this past June, MC12 would already have marked a critical juncture for the organization. Multilateral agreements on fisheries subsidies and agriculture, together with advances in the joint statement initiatives, would have sent a powerful signal that the WTO could continue to provide certainty and predictability for global trade for the next 25 years. Failure to agree, meanwhile, would have called all of this into question. Now, MC12 will have to do this and more. It will mark a key decision point for the direction of the post-COVID global economy. Will we react to the ongoing shocks with renewed cooperation, leading to shared growth and resilience? Or will we move further on the path towards costly fragmentation? Your work in the months ahead, including in this body, will help provide the answer.” To maximize their prospects for success at the next Ministerial Conference, the outgoing Director-General urged members to swiftly agree on his successor, and then “work with her or him to chart a course for MC12 and beyond”. The existing WTO rulebook continues to provide “a vital anchor of predictability and certainty in the global economy,” DG Azevêdo said. [Items proposed for consideration at the 29 July meeting of the Dispute Settlement Body]
Today’s Quick Links:
Pinelopi Koujianou Goldberg: Keep borders open
“Inequality defines our time”: UN chief delivers hard-hitting Mandela day message
World off track in meeting 2030 Agenda, UN deputy chief warns: calls for solidarity in COVID-19 recovery
South Africa: Medupi Power Project – 4th Monitoring Report
World Bank: Global gas flaring jumps to levels last seen in 2009
Related News
Trade policy can ensure inclusive prosperity in wake of COVID-19
Trade-restrictive measures imposed by G20 governments have reached historically high levels, a trend that has only increased with the pandemic.
Worldwide, supply chains are also constricting, and some countries are promoting reshoring of production due to both technological change and more inward-looking trade and economic policies.
As experts and world leaders assess the intricate supply chain vulnerabilities of our essential goods following COVID-19-related trade restrictions, opportunities arise to realign the structure and substance of trade rules to respond to rising inequalities, climate change and frustrations with trade’s role in development.
That is ironically the call made by the UN’s 2030 Agenda for Sustainable Development to achieve its Sustainable Development Goals (SDGs), as recently reiterated at the World Trade Organization (WTO).
These developments occur at the same time that WTO reforms are on the table as its negotiation and adjudication functions have been weakened by the ongoing U.S.-China trade wars.
This provides a rare opportunity to rethink the way our international trade treaties are negotiated, designed and implemented, as well as strengthen the links between trade and development.
We propose a new approach in three areas so trade can be a true engine for sustainable development and is (1) better aligned with the economic and social development priorities and environmental commitments in the SDGs, the Paris Agreement, and the Sendai Framework for Disaster Risk Reduction; (2) developed and implemented through more transparent and participatory processes; and (3) differentiated and tailored to countries’ specific needs. This would require further research and investment in new and improved tools.
An SDG-aligned new trade regime
The 17 SDGs offer a framework, through their 169 targets and 232 indicators, to bridge concerns on all sides of the trade debate and help replace the zero-sum narrative that was already emerging before the pandemic.
It also provides clear targets to guide the reforms to address the disruptions in supply chains, due to the response to the pandemic and the digitalization of the economy.
Substantively, the new model we propose would mean reassessing trade rules in terms of their ability to advance economic, social and environmental dimensions of the SDGs and other international efforts, macroeconomic policies, business and human rights principles, and a balanced approach to the rule of law.
This would build on existing models such as the African Continental Free Trade Area (AfCFTA) that highlights a new approach to trade and development and aligns with the SDGs.
It would include a stronger focus on trade and global health in line with SDG 3 (on good health and wellbeing) and development of a comprehensive food security and trade approach to deliver on SDG 2 (on ensuring zero hunger).
Strengthened labour provisions will also be needed to advance SDG 8 (on decent work and economic growth). Further, it would entail meaningful initiatives on reduced inequalities (SDG 10), gender equality (SDG 5), and micro, small and medium-sized enterprises (MSMEs).
In addition, it would call for a serious approach to trade and climate change, sustainability and the circular economy in support of SDGs 12 to 15.
Time for inclusive rulemaking
The trade rulemaking process needs to become more inclusive, flexible and adaptive.
The process of negotiating and implementing trade rules must reflect the voices of all, including marginalized communities, MSMEs and the economically vulnerable.
A more inclusive approach would build a stronger link between trade rules and the people they are meant to serve, ensuring more buy-in and effectiveness from leaving no one behind.
A people-centred trade regime would also improve understanding and enforcement of increasingly complex rules and build political support for international policies that intersect with national priorities and commitments.
It would not only help address current trade challenges and improve the implementation of the rules but also help countries at different levels of development recover better together.
Trade that works for all
Given that different countries will continue to face different challenges following the pandemic, trade policy should be differentiated and tailored to address specific needs.
To accomplish this, governments could use Aid for Trade, trade facilitation, investment strategy, regulatory review and monitoring, investment incentives, and a new generation of investment agreements.
To ensure that trade helps us “recover better”, we need to put people and the planet at the heart of the multilateral trade regime. The future of multilateralism and trade – and its ability to spur green, resilient, inclusive and circular economies and social development worldwide – will depend upon it.
Chantal Line Carpentier is Chief of UNCTAD’s New York Office and Katrin Kuhlmann is Visiting Professor at Georgetown Law School and President and Founder of New Markets Lab (NML). The views expressed in this article do not necessarily reflect those of UNCTAD.
The full article can be downloaded here.
Related News
SADC Ministers of Finance and Investment and Peer Review Panel discuss financial mechanisms critical for the prosperity of the region
The Ministers of Finance and Investment and Peer Review Panel of the Southern African Development Community (SADC) met virtually on 15June 2020, where they discussed progress made in the implementation of financial mechanisms critical for the prosperity of the region.
In his opening remarks, Honourable Mussa Azzan Zungu, Minister of State Union and Environment of the United Republic of Tanzania, representing the Chairperson of the SADC Committee of Ministers of Finance and Investment, highlighted that attracting investment in the SADC region remains the region’s common aspiration. He underscored the need for the region to create a conducive business and investment climate through, amongst others, harmonization of regional investment frameworks and policies including Bilateral Investment Treaties (BIT) model will generate unprecedented benefits to Member States.
On her part, the SADC Executive Secretary Her Excellency Dr Stergomena Lawrence Tax commended SADC Member States for the progress made in the implementation of the SADC Protocol on Finance and Investment which aims to foster harmonization of the financial and investment policies in the region.
H.E. Dr Tax cited the harmonisation of payments and clearing systems through the SADC Real Time Gross Settlement System (RTGS) as one of the key milestones made in transforming payments and clearing systems in the region. On this note, the Executive Secretary called for speedy on-boarding of all regional currencies to the SADC-RTGS multi-currency platform which has already facilitated the settlement of 1.7 million transactions, translating into R6.87 trillion since July 2013 when it was launched.
During the meeting, the Ministers noted the progress on the implementation of the SADC Regional Development Fund, a facility through which Member States will mobilize development resources as a group. To ensure the full implementation of the Fund, the meeting urged Member States that have not yet signed and ratified the Agreement on the Operationalisation of the SADC Regional Development Fund to do so expeditiously.
The meeting considered progress on the development of the Regional Transmission Infrastructure Financing Facility (RTIFF) which is aimed at enabling SADC Member States maximize the benefits from the regional electricity trade. In order to expedite the finalization of the enabling measures for RTIFF viability, the Ministers directed the Secretariat to continue engagement with the International Cooperating Partners and the regional organisations in the energy sector in mobilizing concessional funding.
On the Project Preparation and Development Facility (PPDF), Ministers encouraged Member States to enhance the Facility which aims to assist SADC to address the implementation of the SADC Regional Infrastructure Development Master Plan (RIDMP) recognizing that infrastructure is the bedrock of economic development and the deepening of regional integration. The meeting commended the Federal Government of Germany and KfW for supporting the SADC PPDF.
The meeting of SADC Ministers of Finance and Investment and Peer Review Panel takes place annually to consider reports from the Peer Review Panel, and review the progress made in the implementation of financial mechanisms.
Related News
COMESA develops Covid-19 Online Portal to spur e-trade
COMESA has developed an online portal to be used by Member States to exchange information on availability of essential products within the region. This is in response to a directive issued by the COMESA Council of Ministers in May this year to develop the platform to support regional trade, during the Covid-19 pandemic.
Secretary General Ms. Chileshe Kapwepwe launched the prototype platform to representatives of Member States, during a virtual meeting today. The focal points will coordinate with the private sector in populating the platform with information on essential supplies. This is expected to boost local production and address shortages in supply from outside the region.
Ms. Kapwepwe said the platform will enable Member States to share information on availability of products and their potential to produce and supply all different types of goods. It will connect buyers to suppliers of essential goods thereby promoting and fostering regional intra-COMESA trade.
As part of the roll out and implementation of the platform, the Secretariat conducted a training programme considering that multiple stakeholder use is needed to make it versatile, functional and sustainable.
The Secretary General said the platform will also help small-scale cross-border traders and SMEs to have access to market information and linking producers, sellers and buyers. She noted that measures being implemented by Member States such as closing borders to prevent the spread of the pandemic are slowing down economic activity and have severely impacted cross border trade.
She said the implementation of the Digital Trade Facilitation programme and other instruments and the liberalization of services remained core to strengthening the stability of the COMESA region against external shocks.
“Over the mid-to long-term, disruption in supply chains could lead to filling of the gap by regional producers and hence the need to strengthen and fully implement the Free Trade Area,” she said. “The successful implementation of the online platform will no doubt be an important step towards realization of COMESA Digital Free Trade Area initiatives.”
COMESA’s strategy in combating Covid-19 includes the need to strengthen openness, coordination and collective approach by Member States in facilitating movement of goods and services amidst restrictive measures, and safeguarding the existing trading arrangements and avoid erosion of gains already made as far as liberalization of trade and investments.
Related News
World off track in meeting 2030 Agenda, UN deputy chief warns, calls for solidarity in COVID-19 recovery
The world was off track in achieving the Sustainable Development Goals (SDGs) by 2030, even before the COVID-19 crisis erupted, but can get back on course by increasing investment in public services, showing solidarity on financing, and “reshaping” how people work, learn, live and consume.
“We can turn this around, if we stay true to the 2030 Agenda,” said Deputy Secretary-General Amina Mohammed, as she closed the High-Level Political Forum (HLPF) – an annual stock-take of the world’s progress in reaching the SDGs, but “the road ahead is now even steeper,” she added.
After eight days of discussions, she said the message is clear on the need for solidarity and foresight on financing, and greater investments in social protections, health systems, education, water, sanitation and digital connectivity.
New approaches
Staying true to the 2030 Agenda also means reimagining the way people work, learn, live and consume, and listening to young people, who are demanding justice and equality. And it means investing in an inclusive, networked multilateralism, with the United Nations at the centre.
“If we do all of this – consciously, concertedly, cooperatively – we can build a better world, our shared destination,” she assured. All efforts must be made to step-up implementation of the 2030 Agenda. “As an international community, we must rise to the test of this pivotal moment.”
Action accelerating
In the lead up to 2020 High-level Political Forum, SDG Acceleration Actions have seen a 35 per cent increase in submissions and a 21 per cent increase in published actions, just within the last two months, featuring a total of 182 bold commitments in concrete terms to advance the goals that have been made by national Governments and other stakeholders.
The Forum heard 47 countries present their Voluntary National Reviews (or VNRs), along with 150 speakers in the thematic sessions, including one Prime Minister and 31 ministerial officials, contributing online, representing all regions.
Related news
-
Keeping trade open amid COVID-19 crisis central to achieving SDGs and economic recovery
-
‘New dynamic’ needed to overcome negative impacts of COVID-19 worldwide
COVID-19 a rare opportunity to ‘shape a new normal’
“The 2030 Agenda remains our shared roadmap to achieve the future we want,” said Mona Juul, President of the Economic and Social Council, which hosted the two-week Forum.
Stressing that COVID-19 should not change the commitment to “realizing the future we want”, she outlined areas for accelerated progress – first and foremost to advance human wellbeing. Discussions centred on greater educational access for girls, which in turn, will reduce infant and maternal mortality.
She highlighted the importance of creating integrated food systems to drive inclusive growth, agriculture, sustainability, and achieve zero hunger.
Recovering better also means protecting the planet, she said, by addressing climate change and the “alarming” rate of biodiversity loss, land and forest degradation.
‘New world of opportunities’
Ensuring access to affordable, reliable, sustainable and modern energy will be crucial to offering a “new world of opportunities” for billions of people, she said.
In the area of urban development, she underscored the essential role of local governments in transforming global intentions into community action. “All of our discussions have underlined that the recovery from COVID-19 represents a rare opportunity to shape a new normal,” she said.
Related News
tralac’s Daily News Selection
Call for Papers: AfDB/UNECA/UNDP African Economic Conference 2020 for young African researchers
Request for Proposals: Undertake feasibility study, design, establish and provide advisory services for the African Union Development Fund
A mini-African summit will be held tomorrow (Tuesday) to continue discussing the disputes around the Grand Ethiopian Renaissance Dam, Sudanese Irrigation Minister Yasser Abbas stated on Friday. The summit is part of the recent African Union-brokered negotiations aiming to resolve the near decade-long disagreements between Egypt, Sudan and Ethiopia over the mega-dam. [Egypt Parliament delays session on mandating Sisi for military intervention in Libya to today]
Towards Intellectual Property Harmonisation in Africa: Africa IP Network workshop report
In conclusion, the panellists discussed questions around the expected system of settling Intellectual Property disputes under AfCFTA, National government to prioritize Intellectual property right and the possibility of PAIPO or AfCFTA increasing the number of intellectual Property application in Africa. Mr Million Habte believed from the current circumstance and the way things are going is very clear that AfCFTA can be a good fit for more IP application in Africa given that AfCFTA has achieved a significant number of ratification by the member states. Mr Denis Bohoussou in his concluding remark indicated that the issue is not about the fragmentation of the IP system because the IP system is, by definition, fragmented. He, therefore, stated that the main issue is on how the IP system can be more efficient for Africa.
Mr Fernando Dos Santos pointed out that having a single IP framework will be problematic in Africa. He referred to the challenge Africa is having with TRIPS agreement because it is a single framework that does not allow Africa to customize the system to meet its objective. He further illustrated that Africa has to build an IP system that works for Africa and to achieve this objective Africa has to initiate a phrasing mechanism, by having a unifying IP policy framework, as well as continental IP norm-setting and having an administrative institution that targets the interest of Africa. Mr Sand Mba Kalu proposed a private sector continental-wide IP network (pdf) that will consider membership and participation from the English, French, Portuguese, Swahili, etc. Speaking countries. He said the network should be open to all Africans who are interested in having an IPRs system that works for Africa.
Interviews:
-
The East African Legislative Assembly Speaker Martin Ngoga spoke with Luke Anami on the EAC budget impasse and pending MPs’ salaries and allowances.
-
CNBC Africa interview with Ms Florizelle Liser (President and CEO of Corporate Council on Africa): Assessing the state of US-Africa trade relations
Central Africa Economic Outlook 2020: Coping with the COVID-19 pandemic (AfDB)
The prospects for medium-term economic growth in Central Africa were favorable before the coronavirus pandemic. The pre-COVID-19 real GDP growth rate for the region was projected at 3.5% in 2020 and 2.9% in 2021, supported by the continuing implementation of the reforms embarked upon, dividends from key investments, development of economic diversification and debt management efforts made. However, the prospects are now gloomier since the onset of the pandemic. In the latest macroeconomic projections that factor in the disease’s potential impact, AfDB has projected a growth rate of -2.5% for the region in 2020 in a best-case scenario where the situation is controlled in the short term, i.e. a drop of 6.1 percentage points compared with its original pre-COVID-19 projection of 3.5%. In a worst-case scenario, where the pandemic is more slowly contained, the estimated growth rate for 2020 is -4.3%, i.e. a drop of 7.8 percentage points compared with pre-COVID projections.
A job structure analysis for Central Africa with a focus on the informal sector and precarity reveals different dynamics, depending on the main economic activity of the country concerned. The ‘agricultural’ countries (Cameroon, CAR, DRC and Chad), the majority of whose jobs are in agriculture have low unemployment rates but very high rates of underemployment, informality and vulnerability. Conversely, the ‘oil’ countries of the region (Congo, Gabon and Equatorial Guinea), have relatively high unemployment rates but with less informality and precarity. Furthermore, the combination of informal jobs and self-employment (generally in agriculture or petty trading) appears to be a source of employment vulnerability in the region. Extracts:
On the regional demand side, household consumption was the main contributor to nominal GDP representing 62.4% in 2019 (Figure 8). This percentage remained stable throughout the entire 2015-2018 period. Investment contributed 25.6% in 2019, while net exports were accompanied by a negative contribution of -1.4%. In 2019, household consumption was the largest contributor to nominal GDP in all the countries except for Congo (Figure 9). Household consumption contributions varied between 38.1% in Gabon and 83.4% in CAR. However, in Congo, government consumption contributes most to nominal GDP representing 66.2%, and the contribution of net exports is negative at -25.9% of GDP. In relative value, household consumption also contributed most to the region’s real GDP growth in 2019 (Figure 10). At regional level, with 1.2 percentage points, household consumption to increased demand exceeds the contribution of investments (+0.8 percentage point), net exports (+0.6 points) and government spending (+0.2 points). In 2018, investments contributed most to demand-driven growth
Concerning the external sector, the region’s current balance should further deteriorate. The Bank’s initial projections forecast a current balance deficit for 2020 equivalent to 2.8% of GDP for the region. The revised postCOVID-19 projections indicate that the current balance deficit would dip further by 3.8 or 6 additional percentage points to 6.7% or 8.8% of GDP depending on a best- or worst-case scenario. This trend is attributable to a deterioration in the terms of trade, a decline in exports and a possible increase in imports and could result in a sharp deterioration in foreign exchange reserves. The drop in export revenue could also affect the country’s ability to honor its external debt service payments. This underscores the relevance of measures taken by the IMF to grant a moratorium on debt servicing to certain countries and proposals from certain G20 governments and multilateral institutions to reschedule or cancel debts.
With the outbreak of the pandemic, the slowing global economy and falling commodity prices will affect Central Africa. Falling global demand, especially in China, could affect economic growth, investments and exports in the region. The drop in the price of a barrel of oil would have a severe impact on export revenue, public finances and the growth of the region’s heavily oil-dependent economies (Gabon, Equatorial Guinea, DRC, and Chad). China remains Gabon’s leading client (33.2% of exports in 2018) and third largest supplier (10% of imports in 2018). In Equatorial Guinea, China is the second leading export (13.5%) and import (12.8%) partner. In the case of Congo, over half of all exports are shipped to China (53.8%), while China is the second largest supplier (15.4%). In Chad, China is the second largest supplier (15.7% of imports) and the third leading client (15.1% of exports). In CAR, China is the fourth largest supplier (6.6% of imports) and the third leading client (7% of exports). Accounting for 23.9% of exports, the ‘Middle Empire’ is the leading client of Cameroon and largest supplier (18.5% of imports). In DRC, China is the leading client (35.3% of exports).
East Africa: “Trade must become more fluid” in post-pandemic era (The Africa Report)
Intra-Community trade within the EAC represents only 20% of its total trade (as opposed to 70% in Europe). Several factors are to blame for this, including the poor quality of infrastructure, complex administrative procedures, low competition in the carrier industry, and a lack of interconnectivity between the various modes of transport. For example, clearing a container takes eight days in Mombasa, less than two days in Mauritius and barely ten minutes in Europe. These differences are even more pronounced when it comes to transport corridors. According to TradeMark East Africa, it takes twelve days for a shipment from Djibouti to travel the 850 km to Addis-Abeba. That is four times longer than Asian averages for the same distance.
Another sign of the lower resilience of continental circuits is the inflation differential per product (imported or not). In Kenya, conflict and subsequent delays at the Tanzanian border have tripled the price per kilo of onions. It is certainly difficult to determine which issues are caused by supply problems, and which are caused by locust invasion, flash floods and recurring inflation during Ramadan. However, those African businesses that have been surveyed confirm that local supply has suffered greater disruptions than the others. [The authors, Christian Yoka and Gaëlle Balineau, are attached to the French Development Agency in East Africa]
Kenya: Trade suffers at borders (Daily Nation)
The government says it will enhance surveillance on the Covid-19 pandemic at the country’s border points as it balances between minimising disruption of trade and keeping people healthy. Health Cabinet Administrative Secretary Rashid Aman, while raising concerns that the regions have become hotspots for transmission of the virus, assured traders Friday that they will not be adversely affected. “The sudden spike of cases is forcing us to put in place urgent but necessary measures to safeguard the lives of those involved and promote safe trade,” Dr Aman said in Busia.
Cross-border small-scale traders raised concerns that Covid-19 had caused them huge losses and adversely affected their livelihoods. The chairlady of the Busia Cross-Border Cooperative, Ms Mariam Babu, said the banning of border trade has adversely affected over 7,000 traders: “Over 80 per cent of informal cross-border traders are women. This has caused strife in many families as women are unable to sustain their needs.”
South Africa: Domestic economic developments, First Quarter (SA Reserve Bank)
Real exports of goods and services decreased by 0.6% in the first quarter of 2020, following a similar increase in the fourth quarter of 2019. The exports of both mining products (including gold) and services contracted, while that of manufactured products increased alongside a sharp acceleration in the growth in agricultural exports. The decline in total mining exports reflected lower export volumes of precious metals (including gold, PGMs and stones) as well as base metals and articles, while travel services weighed down total services. By contrast, strong growth in the export volumes of chemical products as well as vehicles and transport equipment boosted manufacturing exports, while vegetable products boosted overall agricultural exports.
The real imports of goods and services contracted further in the first quarter of 2020 as the import volumes of all the major goods and services components declined, reflecting weak demand amid the recessionary environment (pdf). The lower domestic demand for mining products was broad-based, in particular for precious metals (including gold, PGMs and stones). Contractions in the real import volumes of machinery and electrical equipment; prepared foodstuffs, beverages and tobacco; and chemical products weighed down the real value of manufactured imports, while the decline in vegetable imports reduced overall agricultural imports. The contraction in the total real imports of services was compounded by lower travel services, impacted by global travel restrictions following the outbreak of COVID-19.
Real net exports contributed 4.6 percentage points to real GDP growth in the first quarter of 2020 as real net manufacturing and agricultural exports added 4.6 and 0.6 percentage points respectively. The real net exports of machinery and electrical equipment contributed the most to overall manufacturing exports at 2.2 percentage points. In the mining sector, the contribution of the real net exports of mineral products was more than fully countered by the detractions of the real net exports of precious metals (including gold, PGMs and stones) as well as base metals and articles.
Egypt working on setting up e-commerce platforms targeting African market: trade minister (Ahram)
Egypt is working on setting up number of online platforms for e-commerce that aim to boosting trade exchange with countries that have trade agreements with Egypt, especially in Africa, Minister of Trade and Industry Nevine Gamea said. Gamea made her comments on Thursday during a virtual monthly meeting organised by the American Chamber of Commerce (AmCham).
pdf G20 Finance Ministers and Central Bank Governors meeting: communiqué (376 KB) (G20)
The pandemic has reaffirmed the need to enhance global cross-border payment arrangements to facilitate lower-cost, faster, more accessible and more transparent payment transactions, including for remittances. We welcome the Committee on Payments and Market Infrastructures’s stage two report (pdf), which sets out a comprehensive set of “building blocks” to enhance cross-border payment arrangements by addressing long standing frictions. We look forward to the G20 roadmap to enhance global cross-border payment arrangements to be delivered by the FSB, in coordination with IOs and SSBs, by our meeting in October 2020, which will include practical steps and indicative time frames needed.
We support the Anti-money laundering (AML)/Counter-terrorist financing (CFT) policy measures detailed in the Financial Action Task Force (FATF)’s report on COVID-19, and we reaffirm our support for the FATF, as the global standard-setting body for preventing and combating money laundering, terrorist financing and proliferation financing. We reiterate our strong commitment to tackle all sources, techniques and channels of these threats. We reaffirm our commitment to strengthening the FATF’s global network of regional bodies, including by supporting their expertise in mutual evaluations, and call for the full, effective and swift implementation of the FATF standards worldwide. We ask the FATF to remain vigilant with respect to emerging financial technologies that may allow for new methods of illicit financing and commend its enhanced focus on those technologies’ potential to support AML and CFT efforts.
We emphasize our ongoing support for the G20 Compact with Africa (CwA) initiative and underline the importance of enhanced cooperation between all partners, particularly in these challenging times.
World Bank Group President David Malpass: I urge you to extend the time frame of the Debt Service Suspension Initiative through end 2021 and commit to give the initiative as broad a scope as possible. We’ve made a great deal of progress with DSSI in a short period of time, but more needs to be done. Eligibility of official bilateral claims should extend to all external long-term public and publicly guaranteed debt, including the external debts of SOEs with either explicit or implicit government guarantees. To maximize much needed support to eligible countries, all official bilateral creditors, including national policy banks, should implement the DSSI in a transparent manner. For example, full participation of the China Development Bank as an official bilateral creditor is important to make the initiative work. [IMF MD urges further action to secure a resilient recovery]
Later this week: G20 Digital Economy Ministers will hold a ministerial meeting under the Saudi G20 Presidency on 22-23 July
Related News
tralac’s Daily News Selection
The Seychelles cabinet this week approved the AfCFTA draft initial offer for Seychelles under the Protocol for Trade in Services
African Medicines Agency update: Burkina Faso became the third AU member state to ratify the Treaty (on 14 April 2020) and deposited the instrument of accession to the Chairperson of the Commission of the African Union on 9 July 2020 in Addis Ababa.
SACU-India PTA update: Discussions between SACU [South Africa, Namibia, Botswana, Lesotho, Eswatini] and India to achieve a Preferential Trade Agreement have been revived with the two sides holding a virtual meeting (15 July) to discuss various aspects of the PTA. The Indian side was led by Mr. Srikar Reddy (Department of Commerce, Government of India) while SACU was led by Amb. Steve Katjiuanjo (Ministry of Industrialization, Trade and SME Development, Namibia). Both sides reviewed the progress made and discussed steps to quickly move forward on the PTA. Mr Reddy said in 2019-20, trade between India and Africa as a whole stood at $66.7bn, of which the India-SACU trade was $10.9bn with an immense potential to expand further. Amb Katjiuanjo called India as a strategic partner for SACU.
TICAD8: The 8th Tokyo International Conference on African Development will be held in Tunisia in 2022. Tunisia is the 2nd African country to host this event after Kenya in 2016, Japan’s embassy to Tunisia announced on Thursday. But no dates were provided.
Africa and the WTO election: two updates
-
Will Amina be second time lucky in WTO race? When Kenya’s Amina Mohamed faced the interviewing panel yesterday (Thursday) for the top-seat of the WTO, she certainly felt a sense of déjà vu. Just several years back in 2013, she sat through a similar interview, but was unsuccessful in her quest to become director-general of the global organisation. She lost to Brazil’s Roberto Azevedo, who will step down a year early at the end of August. The second phase of the process in which the candidates “make themselves known to members” will end on 7 September, paving the way for a third phase in which the WTO General Council chair, David Walker, together with the chair of the Dispute Settlement Body, Dacio Castillo of Honduras and the chair of the Trade Policy Review Body, Harald Aspelund of Iceland, will start to consult with all WTO members to assess their preferences and seek to determine which candidate is best placed to attract consensus support. This phase may involve more than one stage of consultations as members seek to narrow the field of candidates. The third phase will last no more than two months.
-
The Nigerian Federal Government has inaugurated a Campaign Strategy Team for Dr Ngozi Okonjo-Iweala, who is vying for the post of the Director-General of the WTO. The Minister of State, Amb. Mariam Yalwaji Katagum, who is the Team Leader of the Campaign Strategy team, pledged the full commitment of members of the team to deliver on its mandate. The Campaign Strategy team comprises officials of the ministry, Ministry of Foreign Affairs; representatives of the Office of the Chief of Staff to the President and Office of the Secretary to the Government of the Federation. The team also include officials from the Ministry of Finance, Nigerian Ambassador to ECOWAS and African Union as well as Geneva–based officials.
Elsie Kanza: The pandemic has created an ethos of urgent collective action in Africa. This model can achieve lasting change (Business Day)
Within the context of the eventual operationalization of the AfCFTA agreement, and with the COVID-19 crisis enduring, here are five pathways to drive economic recovery and build resilience, with tangible initiatives already underway.
-
New financing models for rapid recovery
-
Unlocking manufacturing to mitigate global supply chain risks
-
Leveraging integration and regional value chains
-
Revitalizing infrastructure and connectivity
-
Scaling up digital transformation and inclusive innovation.
China-Africa trade takes big hit from coronavirus in first half (SCMP)
Two-way trade between China and Africa fell 19.3% in the first half of the year to $82.37bn as coronavirus ravaged economies and cut demand for commodities. China, one of the biggest importers of raw materials from Africa, including copper, cobalt and oil, cut its imports from the continent by 31% while its exports to Africa fell by 8.3% as restrictions to curb the spread of the pandemic hurt both exports and imports, according to figures from China’s General Administration of Customs. The world’s second-biggest economy sold $48.42bn of goods in the six-month period and imported $33.95bn in goods and raw materials from Africa. South Africa, one of China’s key markets for goods and also a source for raw materials, saw trade between the two countries fall by 27.6%. China cut imports from South Africa by nearly a third, or 32.2%, to $8.68bn, while exports to the country slumped by about a fifth to $6.20bn, according to the customs data.
Southern Africa Economic Outlook 2020: Coping with the COVID-19 pandemic (AfDB)
However, though sluggish, the export growth outlook for 2020 will likely be negatively affected by the COVID-19 outbreak despite individual national initiatives. For instance, Botswana’s export growth had been forecasted to increase to 6.5% in 2020 and to 7.9% in 2021 against the backdrop of implementation of the 11th National Development Plan, which emphasizes the need to diversify both production and exports away from mining into other growth-enhancing and job-creating sectors. In Malawi, the government has proposed to strengthen value-addition through the Special Economic Zone Bill to regulate exports through a national export strategy. The bill proposes multi-product SEZs for oilseeds, sugar cane, beverage manufacturing, and agro-processing, while also prioritizing exports of tea, legumes, oilseeds, and minerals over tobacco. In Eswatini, the revival of the African Growth and Opportunity Act and European Free Trade Association markets were projected to open new markets for exports, which should also benefit from the Southern African Customs Union on the back of South Africa maintaining its growth momentum.
Export revenue has been fluctuating for the region between 2011 and 2018, mainly driven by volatile commodity prices and low production in agriculture as a result of climatic shocks (Table 6). The highest export growth was realized in 2011 at 20.8%. Thereafter, export revenue has been on the decline, with the worst year being 2015. Export growth bounced back in 2017 with a 14.2% increase before decelerating to 10.1% in 2018. Given that the SADC-EPA Group is the largest of EU’s trading patterns in Africa, it will have the highest adverse impact on its trade balance, given that the EU is the epicenter of COVID-19 after China.
Before the COVID-19 pandemic, economic growth in Southern Africa had been projected to recover in 2020. However, following the outbreak of COVID-19, economic growth is projected to slow down through the transmission mechanisms of depressed global demand, decline in commodity prices, low export performance and low foreign direct investment. The pandemic is projected to adversely affect the economic sectors driving the regional economies namely services (tourism and hospitality, transport, distribution and logistics, retail and entertainment), agriculture and mining sectors, among others. As a result, macroeconomic stability will be undermined in a context where some of the regional economies were already fragile, further weakening sustainable development. Clearly, both domestic and external related risks induced by the COVID-19 pandemic means that macroeconomic convergence remains elusive, especially given the fragile economic outlook. Given this, the following policy recommendations are proposed:
Kenya: First quarter 2020 balance of payments (KNBS)
Total export earnings improved by 14.0% from KSh 157.7bn in the first quarter of 2019 to KSh 179.8 billion in the first quarter of 2020. Total exports to Asia rose from KSh 40.9 billion in the first quarter of 2019 to KSh 43.8 billion in the quarter under review representing a 7.1% increase, as presented in Annex 5. There were marked increases in total exports to the United Arab Emirates (24.0 %) and China (23.9%). The major contributors to this rise were increases in the domestic exports of tea to the United Arab Emirates and titanium ores and concentrates to China, as well as increased re-exports of kerosene type jet fuel to these two destinations. Conversely, there was a decline in exports of articles of copper and sodium carbonate to India resulting in reduced earnings from this destination in the review period.
The African continent remained the leading export destination registering an increase of 22.3% in the total value of exports to KSh 66.4 billion during the first quarter of 2020 from KSh 54.3 billion in the same quarter of 2019 and accounted for 36.5% of the total exports. Exports earnings from Rwanda, Uganda, Sudan and South Sudan jointly increased by KSh 11.5 billion from the corresponding quarter of 2019 representing a 45.9% increase. These countries jointly accounted for 55.0% of the total exports to Africa during the period under review. Uganda remained the leading export destination contributing 28.4% of the total export earnings from Africa. However, total exports to Burundi and Somalia fell by 35.5% and 18.2%, respectively. [See Table 3: International Merchandise Trade, 2018– 2020]
pdf 36th Extraordinary Assembly of IGAD Heads of State and Government: communiqué (885 KB) . The 36th Extraordinary Assembly of IGAD Heads of State and Government was held on 14 July 2020, via videoconference, chaired by H.E. Dr. Abdalla Hamdok (Prime Minister of the Republic of the Sudan). On the IGAD Response to the COVID-19 Pandemic:
-
Commended the Secretariat under the leadership of H.E Dr. Workneh Gebeyehu for fast-tracking the formulation and implementation of the comprehensive, 5-pillar IGAD Regional Response Strategy to COVID-19 as directed by the 35th Extraordinary Assembly on 30th March 2020 and took note the progress made thus far
-
Directed the IGAD Secretariat produce a Monthly Regional Status Update Report on COVID-19 and corresponding responses in the region
-
Called for the adoption of Regional Guidelines on Harmonization and Facilitation of Cross Border Transport Operations across the Region in preparation for gradual and sequenced deconfinement and reopening of the air space between Member States.
IGAD launches consultations with member states on the harmonization of production and utilization of migration data
The 27th Ordinary Meeting of the ECOWAS Administration and Finance Committee concludes today
Moratorium on electronic transmissions: fiscal implications and way forward (UNCTAD)
In March, India and South Africa outlined the adverse implications of the moratorium for developing countries. These include the loss of policy space together with potential tariff revenues and the possible impact of digital technologies like 3D printing on manufacturing. A decision on continuing with the moratorium or not will be taken at the 12th WTO Ministerial Conference in 2021. COVID-19 and the subsequent prolonged lockdowns have led to an exponential rise in imports of digitalized luxury items like movies, music, video games and printed matter. While the crisis is expected to push millions of people in developing countries to extreme poverty, precious domestic financial resources are being spent on imports of these luxury items. Estimating the potential revenue dent (pdf):
The WTO identified digitizable products under five categories: sound recordings, audiovisual works, video games, computer software and literary works. It identified 30 digitizable products with their Harmonized System (HS) codes and associated tariffs, estimating that the physical trade of these products has been falling at an annual rate of -2.7% since 2000. It concluded that the falling physical imports are associated with reducing tariff revenues, therefore the estimated tariff revenue loss due to the moratorium is not significant.
However, UNCTAD highlighted that the moratorium applies to the online imports, not the physical ones. It was the first study to estimate online imports of digitizable products for 91 countries. The study found that the actual global physical imports of the identified 49 digitizable products in 2017 were worth $116bn, while the estimated physical imports were valued at $255bn. The global imports of these digitizable products via electronic transmissions were therefore estimated at $139bn. The study further estimated that due to the WTO moratorium, the potential tariff revenue loss to developing countries was $10bn in 2017.
The potential tariff revenue loss to least developed countries was estimated at $1.5bn while sub-Saharan African countries lost about $2.6bn. High-income countries experienced a tariff revenue loss of only $289m, as their average bound duties are pegged at 0.2%. Developing countries can therefore generate forty times more tariff revenue every year compared with developed countries by imposing customs duties on electronic transmissions. The authors, Richard Kozul-Wright, Rashmi Banga]
pdf The role of trade finance in promoting trade: the implications of COVID-19 on trade finance in Africa (392 KB) (COMESA)
To mitigate the potential impact of Covid-19 on African trade and keep market access channels open, uninterrupted supply of trade finance by banks is vital. But there are reasons to believe that the measures adopted by governments to combat the pandemic may also impact firms’ ability to obtain trade finance at a time when they need it the most. The following are some of the key policy recommendation which could help overcome the challenges (noted above):
-
Enable a rapid transition to paperless trading by: (a) immediately avoiding all existing legal requirements for trade documents to be in hard-copy paper format; and (b) facilitating fast-track adoption of the UNCITRAL Model Law on Electronic Transferable Records to provide a sound legal basis for the use of e-documents in the processing of trade finance transactions.
-
Implementation of regulatory reforms, aimed at promoting trade facilitation to ensure that Regional FTA’s are well functioning and facilitate access to trade finance for the benefit of intra-Africa trade.
-
Know your customer (KYC) and regulatory compliance requirements by international banks with respect to their African correspondent banks need to be addressed to avert any withdrawal of these institutions from Africa or any meltdown of correspondent banking relationships.
-
Avoiding the unintended consequences of Basel III in trade finance particularly for developing countries.
-
As development finance institutions and governments set up financial facilities to support businesses and critical sectors, part of the solution should entail setting up rapid emergency facilities such as trade finance lines and risk-mitigation instruments earmarked to support banks, SMEs and other local corporates.
-
The scale of the pandemic shows that rapid support may be needed for banks and enterprises in vulnerable and fragile states in Africa, as well as those that may be severely affected by commodity price shocks.
-
Ensure all export credit agencies are equipped to provide adequate support for short-term trade transactions with appropriate coverage limits and geographical scope. [Note: The author, Ibrahim A. Zeidy, is the director of the COMESA Monetary Institute]
FAO launches the new COVID-19 Response and Recovery Programme outlining seven key priority areas. The agency is calling for $1.2 in initial investment to support the needs of the new COVID-19 Response and Recovery Programme. “We cannot employ a ‘business as usual’ approach anymore,” highlighted FAO Director-General QU Dongyu in his opening remarks. The FAO called for immediate action in seven key priority areas:
-
Reinforce a global humanitarian response plan for COVID-19
-
Improve data for decision-making
-
Ensure economic inclusion and social protection to reduce poverty
-
Bolster trade and food safety standards
-
Boost smallholder resilience for recovery
-
Prevent the next zoonotic pandemic through a strengthened One Health Approach
-
Trigger food systems transformation.
The COVID-19 pandemic struck the global economy after a decade that featured a broad-based slowdown in productivity growth. Global Productivity: Trends, Drivers, and Policies presents the first comprehensive analysis of the evolution and drivers of productivity growth, examines the effects of COVID-19 on productivity, and discusses a wide-range of policies needed to rekindle productivity growth. The book also provides a far-reaching dataset of multiple measures of productivity for up to 164 advanced economies and emerging market and developing economies and introduces a new sectoral database of productivity.
Mark Lowcock, the UN’s top humanitarian official, today called on the world’s leading industrial nations, the G20, to step up support, as he released an updated $10.3bn appeal to fight coronavirus spread in 63 low-income countries.
What rest of the region must do to join Tanzania, Kenya in middle-income league
Kenya: SGR cargo revenue declines by Sh154m in five months
COVID-19: SADC MPs brace for long haul
Uganda: WBG provides $15.2m in support of coronavirus response
IMF: Five charts that illustrate COVID-19’s impact on the Middle East, Central Asia
Related News
tralac’s Daily News Selection
Okonjo-Iweala unfolds plans to rejuvenate WTO (ThisDay)
While noting that micro, small and medium scale enterprises have been bruised by the COVID-19, she stressed the need for discussions on how to integrate such businesses in the multilateral trading system, which is very important:
“One crucial thing arising from COVID-19 and the impact it has had on economic growth and the predicted contraction of the world economy and economies around the world is that MSMEs have been badly affected. So, they need liquidity. So we need to make sure that for them to survive, they should have adequate liquidity to keep their businesses going. My worry is that there have been countries globally who have been able to make this liquidity available to their MSMEs and there are others, like many developing countries and least developed countries who have not. And, one of my roles as African Union envoy, with my other five colleagues, has been to see how we can facilitate and encourage additional resources from outside and inside to these MSMEs, so that they can regain their position and be able to stand, not only to keep jobs but to thrive in the future and create more jobs. So, I am very keen. I think it is a very important sector and the WTO would work hard to make sure such types of enterprises are supported.” [AFP: WTO leadership rivals map path for solving ‘existential crisis’]
Soromfe Uzomah: How global disruption can have local implications (Microsoft 4Africa)
The global impact that the Covid-19 pandemic has had not only on public health, but on business, cannot be underestimated. It’s prudent to consider the impact such a global disruption of trade has on small and medium businesses. Anticipating and mitigating the impact of unforeseen global events on supply chain management is crucial if SMEs who are reliant on goods from an affected area are to survive. [Note: The author is head of strategic partnerships: Microsoft 4Afrika]
14th European Union - South Africa Ministerial Dialogue: SA and EU move towards rebuilding frayed relations (Daily Maverick)
The meeting had been particularly important to bring together South Africa’s Minister of Trade and Industry, Ebrahim Patel, and EU trade commissioner Phil Hogan, who had been battling to align their diaries for some time. Eventually, they had held two preparatory meetings over the last week and then the full ministerial meeting on Tuesday. Finance Minister Tito Mboweni and EU International Co-operation Commissioner Jutta Urpilainen also attended. Kionka said the ministerial conference discussion had three basic components.
The most robust and “pithy” discussion had been on “trade irritants”, Kionka said, including the steep increases in tariffs which South Africa had recently imposed on chicken imports from the EU. These had risen from 0% to 35% in September 2018, before dropping to 25% in March 2022. She confirmed that the EU had registered a dispute about those through the dispute settlement mechanism of the trade agreement between the EU and the SADC region. But so far there had been no headway, Kionka said. But she said South Africa had scored a victory on another important issue because, in response to the logistical challenges posed by Covid-19, the EU and South Africa had now all agreed to accept electronic certificates (instead of the usual paper ones) to verify the origin of all traded products and also the health and phytosanitary (plant health) requirements for all animal and plant products from both sides. An official added that South Africa had insisted that all required processes to re-authorise exports to the EU of racehorses and heated game and poultry meat had to be finalised as soon as possible.
Conversely, though, the EU had failed to persuade South Africa to lift the sanitary and phytosanitary restrictions it had been using to completely block imports of poultry from Belgium and France since 2017. “Minister Patel is a pretty tough negotiator,” she remarked. She noted that Patel had made the point that the EU had enjoyed an overall trade surplus with South Africa over the past 10 years. “What he didn’t say was that South Africa has enjoyed a surplus in that period on agrofoods.” [The author: Peter Fabricius; Joint EU-SA press release: Trade, economic transformation and green recovery after COVID-19]
Surveys of the socio-economic impact of COVID-10: Kenya, South Africa, Morocco
-
Kenya: The KNBS survey is aimed at measuring the impact of COVID-19 on health, labor market, transport cost and housing sectors. The survey is also aimed at assessing the awareness of COVID-19 and the appropriate protective measures. The COVID-19 Household Socio-Economic Impact Survey is a longitudinal survey set to be implemented in 6 waves on a biweekly basis. Data collection for the first wave was undertaken between 2nd and 9th May 2020.
Labour force participation rate of the population age 18 years and above in the seven days preceding the survey was 56.8%. About two in three (65.3%) males were in the labour force while slightly more than half (51.2%) of the females were found to be outside the labour force in the reference period. Almost half of the respondents who were absent from work said that it was due to lockout or stay away instructions as guided by the Government and/or employers. Nine out of ten persons who were absent from work due to stay away or lockdown were not sure when they would be returning to work.
Overall, there has been a 51.7% increase in the cost of transport. Migori County recorded the highest increase while Turkana County recorded the least at 77.2% and 24.4% respectively. Nationally, 30.5% of households were unable to pay rent on the agreed date with the landlord . The results show that at least 21.5% of the households in Kenya who usually pay rent on the dates agreed with landlords were unable to pay rent for the month of April 2020. Reduced income/earnings (52.9%) was the main reason for inability by households to pay rent. Only a small proportion of households (8.7%) received waiver/relief from their landlords for the same month.
-
South Africa: NIDS-CRAM 2020 Coronavirus Rapid Mobile Survey. Given that all in-person data-collection activities have ceased, the decision was made to conduct a telephonic follow-up survey of a pre-existing nationally representative household panel survey; the National Income Dynamics Study. With the permission of the South African Presidency and after ethical clearance the NIDS-CRAM research team was granted access to the sampling frame and telephone numbers of all individuals surveyed in NIDS 2017. The first wave of NIDS-CRAM ran from the 7th of May to the 27th of June and used 50 call-centre agents to survey a representative sub-sample of 7,000 respondents from NIDS 2017. Among many other topics, the 20-minute survey asked respondents about their current and retrospective employment, household hunger, receipt of grants, COVID-19 risk perceptions, knowledge and behavior, among many other questions.
The aim of this synthesis report is to present an overview of the high-level findings from the NIDS- CRAM Working Paper Series which is made up of 11 papers. All of these papers use the NIDS- CRAM Wave 1 data as their primary source and report on various aspects related to employment, poverty, hunger, grants, migration and adherence to COVID-19 prevention strategies. All papers have undergone peer-review. The papers and the data on which they are based are all freely available for anyone to download and use. [Download the complete set of papers, here; Ferial Haffajee: The day the bottom fell out of South Africa – a triple pandemic has hit us]
-
Morocco. This World Bank Economic Monitor presents the current outlook for Morocco given the recent COVID-19 developments. The post-pandemic economic recovery is projected - with unusually large uncertainty - to be a protracted one, with growth only returning to the pre-pandemic trend by 2022. Faced with the risk of a protracted pandemic, moving from mitigation to an adaptation phase is key to ensuring a resilient, inclusive, and growing Moroccan economy. Despite potential volatility in the economic recovery phase, Morocco has an opportunity to build a more sustainable and resilient economy by developing a strategy to adapt, similar to its approach to the environment front. Impact on firms and households (pdf): The recent survey released by the HCP on the impact of COVID-19 on the economic, social and psychological situation of households reveals that 34% of households lost their source of income (Figure29). Figure 30 indicates also that 83% of the household is relying on social solidarity as sources of incomes while 22% are using their savings to mitigate losses of incomes. This has been partly mitigated by government assistance to compensate for job loss (19% of households) - Figure 31.5 The results showed that the services sector is the most affected, with 245,000 workforce reductions. However, 60% of households with a member who lost a job have difficulty accessing government assistance including 54.5% in urban areas and 68% in rural areas. These percentages amount to 21% at the national level, 19% in urban areas and, 26% in rural areas calling for an acceleration of government support.
Moroccan women are likely to be disproportionately impacted by the economic and health consequences of the pandemic. Female labor force participation in Morocco stood at 21.3% before the pandemic started and has concentrated in the agricultural and industrial sectors. The latter is negatively impacted by the crisis and lockdown measures. Further, 38.5% of employed women are working in the services sector, one of the most affected sectors. Moreover, around 17% of women in non-agricultural employment are working in the informal sector, leaving them more vulnerable. Given that 52% of RAMED beneficiaries are women, some women have received support for income losses as head of households (18.4% of Moroccan women are heads of household).
-
A five-nation survey by GeoPoll in Sub-Saharan Africa has found that 60 percent of those employed prior to the COVID-19 pandemic have not been able to work as a result of the outbreak, and nearly half of those are unsure if they will have jobs to go back to. Of the five countries surveyed in Sub-Saharan Africa: Ivory Coast, Kenya, Mozambique, Nigeria and South Africa, an even larger proportion, at four out of five of those polled in the survey of 2,500 respondents, reported that their income has decreased during the pandemic, with those in informal jobs, particularly in trade and agriculture, reporting the most widespread and largest falls in incomes. Overall, some 60% of formal sector workers reported income falls, but 88% of informal sector workers reporting reduced earnings. The main areas of GeoPoll’s study are:
-
Ability to work and income change since the outset of COVID-19
-
Concern over expenses and the ability to pay for basic needs
-
Usage of loans, savings, and income to pay for expenses
-
The impact of COVID-19 on loans and mobile money services
-
Receipt of aid and opinions of government priorities.
The study was conducted by SMS from June – July 2020, with 500 respondents per country or 2,500 total, and a nationally representative sample by age, gender, and location. [Note: Download the full PDF report, a 16-page report including breakdowns and analysis by country, job type, income level]
-
North Africa Economic Outlook 2020: Coping with the COVID-19 pandemic (AfDB)
The latest projections for 2020 indicate a loss of 5.2 points of growth in the region, from a growth rate of 4.4% to -0.8% if the pandemic were to last until June 2020 (baseline scenario) and a loss of 6.7 points with a growth rate of -2.3% if the pandemic were to persist until December 2020 (worst-case scenario). In 2019, for the second year in a row, North Africa was the second-best performing region in Africa with a growth rate estimated at 3.7%. Extract (pdf):
North African countries also experienced high current account deficits on average, at 4.4% of GDP in 2019. The 2020 pre-COVID-19 outlook indicated a slight deterioration of the regional current account deficit, at 5.6% of GDP. However, the strong impact of the crisis on commodity prices and trade will significantly affect North African economies. North African countries have important trade relationships with China and European countries as well as important tourism receipts and remittances. The worst-case scenario, which assumes a reduction of the global demand by 7.9% and an international price of oil at USD 20 per barrel in 2020, projects a current account deficit of 11.4% of GDP in 2020, mainly driven by a double-digit deficit in oil-exporting countries (20% of GDP and 19.8% of GDP in Algeria and in Libya, respectively) but also in Mauritania (17% of GDP) and Tunisia (12.2% of GDP) whose main trading partners are China and European countries.
The COVID-19 pandemic will push further the negative contribution of net exports to growth with the expected widening of the trade deficits. The current account deficit in North Africa, initially projected at 5.6% of GDP in 2020, is likely to reach 10% of GDP with reduced trade in volume and reduced prices of oil and other commodities. Negative net exports point to saving investment imbalances in the region (i.e., the countries spend more than they save), especially in Libya. This is regardless of the openness to trade of those economies. Indeed, Algeria and Egypt are the least open to trade with a ratio of exports plus imports to GDP at 58% and 48% respectively in 2018, compared to 111% for Tunisia. However, the ratio of net exports to GDP is comparable in the three countries. In addition, the openness to trade of Algeria and Egypt has declined since 2008 (from 71.6. and 71.7 respectively). For the other four countries of North Africa, despite significant volatility since 2008, openness to trade remains unchanged.
Africa will need a lot of energy to power its COVID-19 recovery, says Vera Songwe (ECA)
Speaking during a Res4Africa webinar on scaling up renewable energy investments in Africa, Ms Songwe said actions to ensure there is enough energy to power Africa’s rebuilding efforts should focus on three key aspects - infrastructure, supply and cost of energy. She said following the outbreak of the COVID-19 pandemic, trade, education and health had moved to ICT platforms, consuming about 40% of the continent’s energy. “So for us to be able to have on the continent a viable ICT sector that will allow our economies to build back better, we are going to need a lot of energy,” said Ms Songwe, adding private investments will play a crucial role, especially with the launch of the AfCFTA. The ECA Executive Secretary said the issue of the continent’s energy was not transition but energy substitution. Only two countries in Africa, Uganda and Seychelles, have viable electricity sectors, said Ms Songwe, a situation she said needs to be addressed with only 19 nations operating at expenditure while the rest are operating at excessive losses. Cost reflective tariffs are part of the problem affecting the continent’s power sector, she said, adding; “We must ensure that on the continent tariffs are cost reflective.” [RES4Africa Foundation, Enel Foundation: Scaling up Africa’s renewable power]
World Bank: Debt Report 2020 Edition III. This is the first of a new series of Debt Reports for 2020 to be published online, at regular intervals, over the course of the year. Their aim is to provide users with analyses of evolving trends and developments related to external debt and public debt in individual countries and regional groups, with primary emphasis on low- and middle-income countries, and to keep users abreast of debt-related issues and initiatives.
Related News
14th European Union-South Africa Ministerial Political Dialogue: Joint Press Release
14 July 2020 (by video conference)
-
The European Union High Representative for Foreign Affairs and Security Policy and Vice President of the European Commission, Mr Josep Borrell Fontelles; and the Minister of International Relations and Cooperation of South Africa, Dr Naledi Pandor, co-chaired the 14th Session of the Ministerial Political Dialogue in the context of the Strategic Partnership on 14 July 2020, by video-conference. The meeting was also attended by the European Union Commissioner for Trade, Mr Phil Hogan, the European Union Commissioner for International Partnerships, Ms Jutta Urpilainen, the South African Minister of Trade, Industry and Competition, Mr Ebrahim Patel and the South African Minister of Finance Mr Tito Titus Mboweni.
-
Both sides discussed how to adapt their strategic partnership within the challenging context of the COVID-19 pandemic and its impact, political, social and economic priorities in South Africa and the European Union, and the preparation of the European Union (EU)-African Union (AU) Summit.
-
Both sides reaffirmed their goal of strengthening the rules-based international order, human rights, universal values and multilateralism. Both sides shared their concern about the impact of COVID-19 on developing countries and least developed countries, the majority of which are in Africa. They underlined the importance of global solidarity and multilateral cooperation in relation to COVID-19 response as demonstrated by the “Team Europe” support package and the EU hosted “Worldwide Vaccine Pledging Marathon” to accelerate development and production of diagnostics, treatments and vaccines against the Coronavirus, and their universal deployment. The appointment by President Cyril Ramaphosa – in his capacity as Chair of the African Union – of Special Envoys to mobilise international economic support for Africa’s efforts to address severe economic challenges that African countries are facing because of the COVID-19 pandemic, is an important contribution to fostering coordinated action.
-
Both sides acknowledged the outcomes of the European Union – South Africa dialogues on thematic issues, engagements between South Africa and European Union institutions as well as those between South Africa and European Union Member States. Both sides expressed the view that cooperation deserves a stronger focus on joint assessment and communication of results.
International situation, peace and security issues
-
Both sides discussed the UN Security Council agenda, including the priorities set for South Africa’s Presidency of the Security Council in December 2020, which will mark the end of the country’s current non-permanent membership. Both sides stressed the importance of EU-UN-AU trilateral cooperation and discussed a range of current political and security issues in Africa, in Europe and beyond. Both sides support the United Nations Secretary-General’s (UNSG) call for a global ceasefire in the context of COVID-19 and in this regard welcomed the adoption of Security Council Resolution 2532(2020). Both sides are committed to work together to ensure that ongoing peace processes, humanitarian aid and situations of fragility do not suffer from the impact of the pandemic.
-
Both sides updated each other on the preparations of the 6th EU-AU Summit agreed to take place on 28/29 October 2020 in Brussels and pledged an ambitious outcome with joint strategic priorities for the years to come. The European Union shared with South Africa its vision and proposals put forward in the Communication: “Towards a Comprehensive Strategy with Africa,” as well as in the EU’s Global Response to COVID-19. South Africa welcomed the solidarity expressed by the EU in support of the AU’s recovery from COVID-19, as well as the implementation of South Africa’s national stimulus programme. South Africa shared developments on the African Continental Free Trade Area (ACFTA). Both sides emphasised the importance of continental integration as a fundamental element of their recovery strategies.
-
The EU-AU Summit provides an opportunity to work together to advance all three pillars of sustainable development (economic, social and environmental) as well as peace and governance agenda, as part of the recovery from the COVID-19 pandemic and longer-term strategic cooperation. South Africa and the European Commission are collaborating actively in the organisation of the first AU-EU Ministerial Dialogue on Science, Technology and Innovation, due to take place on 16 July 2020, which will specifically consider partnerships responding to COVID-19. Both sides agreed that the AU-EU meeting of Ministers of Foreign Affairs scheduled for the first half of September would be a key stepping-stone on the road to the EU-AU Summit.
Trade, economic transformation and green recovery after COVID-19
-
Both sides reviewed opportunities for enhancing two-way trade and boosting investment co-operation under existing multilateral and bilateral frameworks. As both share a common interest in a stable, fair, and inclusive rules-based multilateral trading system centred on the World Trade Organisation (WTO), the two sides exchanged views on WTO reform that is cognisant of the needs of all members, including developing countries. Both sides recognised the importance of moving forward in the ongoing negotiations in view of the 12th WTO Ministerial Conference.
-
Both sides also discussed economic diplomacy strategies to improve the business and investment climate and to develop resilient, diversified and sustainable national, regional and bilateral value chains in sectors with growth potential. In light of the economic impact of COVID-19, South Africa emphasised the importance of investment to support South Africa’s industrial development objectives. Both sides expressed the intention to seize opportunities provided by the EU – Southern African Development Community (SADC) Economic Partnership Agreement to scale up bi-lateral trade and investment relations.
-
Both sides acknowledged that alignment with South Africa National Development Plan, with a focus on addressing inequalities and just transition within the economy, remained relevant for future cooperation addressing South Africa’s socio-economic challenges.
-
Both sides shared their assessment that the global economic crisis caused by COVID-19 pandemic which has exacerbated poverty, inequality and unemployment, represents an opportunity to pursue an inclusive, greener and sustainable economic recovery in alignment with their national priorities. This, they agreed, is a way of achieving resilient economic growth, addressing the needs of the most vulnerable sectors of society and creating jobs for the future – especially in Small, Medium and Micro Enterprises (SMMEs) – while stepping up action on climate change, sustainable energy systems, addressing the biodiversity crisis and other environmental challenges. The EU offered to continue support to South Africa’s economic transformation through facilitation of investment, of sharing of technology and provision of expertise for green, fair, inclusive, and just economic recovery. As an urgent measure, the EU allocates EUR 2 million to South African national parks and wildlife reserves to help countering the loss of tourism revenues.
-
Both sides intend to scale up cooperation and jointly endeavour for higher ambition in the multilateral sphere, including in relation to the implementation of the 2030 Agenda for Sustainable Development, the Addis Ababa Action Agenda, the United Nations Framework Convention on Climate Change and its Paris Agreement, the Montreal Protocol, and other Multilateral Environmental Agreements, including the negotiation of a new ambitious post 2020 global biodiversity framework. Both sides recognise the importance of mobilising both public and private capital towards sustainable investments and to support a global transition to a low-carbon and resilient economy. In this regard, they expressed their determination to reinforce bilateral and multilateral cooperation on sustainable finance.
-
Both sides highlighted the role that cooperation in research and innovation has played in dealing with the COVID-19 crisis through scientific advice as well as research, including co-funding provided by South Africa to the flagship European Developing Countries Clinical Trials Partnership (EDCTP). They appreciated the role that science, technology and innovation will continue to play for the socio-economic recovery of South Africa and the European Union.
-
Both sides emphasised the need for universal, timely and equitable access to and fair distribution of all quality, safe, efficacious and affordable essential health technologies and products including their components and precursors required in the response to the COVID-19 pandemic as a global priority, and the urgent removal of unjustified obstacles thereto; consistent with the provisions of relevant international treaties including the provisions of the Agreement on the Trade Related Aspects of Intellectual Property Rights (TRIPS) and the flexibilities within the Doha Declaration on the TRIPS Agreement and Public Health.
Related News
Africa will need a lot of energy to power its COVID-19 recovery, says Vera Songwe
Africa will need a lot of energy to build back better in the aftermath of the coronavirus pandemic, Executive Secretary of the Economic Commission for Africa (ECA), Vera Songwe, said Wednesday.
Speaking during a Res4Africa webinar on scaling up renewable energy investments in Africa, Ms. Songwe said actions to ensure there is enough energy to power Africa’s rebuilding efforts should focus on three key aspects – infrastructure, supply and cost of energy.
She said following the outbreak of the COVID-19 pandemic, trade, education and health had moved to ICT platforms, consuming about 40 percent of the continent’s energy.
“So for us to be able to have on the continent a viable ICT sector that will allow our economies to build back better, we are going to need a lot of energy,” said Ms. Songwe, adding private investments will play a crucial role, especially with the launch of the Africa Continental Free Trade Area (AfCFTA).
The ECA Executive Secretary said the issue of the continent’s energy was not transition but energy substitution.
“We do not have the transition problem in the kind of scale that Europe has. The conversation for Africa is around substituting expensive bad fossil fuels into something that is cleaner and most certainly cheaper. We have to replace fuel-based energies with green and sustainable ones,” Ms. Songwe said.
She added partnerships and cooperation were needed in supporting African countries to deliver on their energy and development agenda.
“We need to begin to honestly and seriously look at the financing structures of Africa’s infrastructure. We are financing infrastructure at shorter time frames than it takes to build that infrastructure resulting in debt sustainability issues,” said Ms. Songwe to private sector representatives attending the webinar.
She said Africa’s power utilities need to up their game if they are to play a crucial role in helping the continent build back better post COVID-19.
Only two countries in Africa, Uganda and Seychelles, have viable electricity sectors, said Ms. Songwe, a situation she said needs to be addressed with only 19 nations operating at expenditure while the rest are operating at excessive losses.
Cost reflective tariffs are part of the problem affecting the continent’s power sector, she said, adding; “We must ensure that on the continent tariffs are cost reflective.”
Ms. Songwe said the continent needs to collectively work together to ensure regional power pools are viable.
“Not every African country can produce energy,” she said, adding with the game-changing AfCFTA, the private sector can invest in the regional power pools to the continent’s benefit. Ms. Songwe said local currency energy investments would go a long way in boosting access to affordable energy on the continent.
For his part, Francesco La Camera, Director General of the International Renewable Energy Agency (IRENA), said Africa’s energy decisions are pivotal to climate mitigation and socio-economic development. He reinforced the centrality of the energy transition to post COVID-19 recovery and the 2030 Agenda for Sustainable Development and Africa’s long-term prosperity.
“The need to electrify cities in a sustainable way must be the core of government strategies,” he said, adding there was an urgent need to ensure “the ruling class addresses the perception of risks that investors still have in some parts of Africa”.
Stefano Signore, Head of Unit for Sustainable Energy and Climate Change, Directorate-General for International Cooperation and Development in the European Commission, said: “There is a calling and need to work with Africa and for Africa. We are confident that Europe and Africa can work together to meet the climate agenda, undertake a clean energy transition and forward Africa’s renewable energy development.”
For his part, Amith Singh, Head of Energy Finance at Nedbank in South Africa, said: “If we really want to see Africa’s renewable power being developed, we need global initiatives that can leverage cooperation and investment.”
He said Europe can mitigate risks in African countries with sustainable programmes that can encourage the development of new policies, capacity building, local manufacturing and provide financial assistance.
Roberto Vigotti, Res4Africa Foundation’s Secretary General, said placing renewable energy at the heart of Africa’s COVID-19 recovery is crucial to bridging the energy access gap on the continent.
RES4Africa Foundation and Enel Foundation’s joint 3rd flagship publication Scaling up Africa’s renewable power which is dedicated to de-risking renewable energy investments in Africa, was unveiled during the webinar.
Mr. Vigotti said the publication will shed some light on the importance of effective de-risking initiatives to unlock Africa’s renewable energy potential and calls for a new impetus on possible solutions to crowd-in renewable energy investments at scale.