INTERNATIONAL

Managing Risk and Facilitating Trade in the COVID-19 Pandemic – Maintaining trade flows as much as possible during the COVID-19 pandemic will be crucial in providing access to essential food and medical items and in limiting negative impacts on jobs and poverty. Some countries are closing border crossings and implementing protectionist measures such as restricting exports of critical medical supplies. Although these measures may in the short-term provide some immediate reduction in the spread of the disease, in the medium term they may undermine health protection, as countries lose access to essential products to fight the pandemic. Instead, governments should refrain from introducing new barriers to trade and consider removing import tariffs and other taxes at the border on critical medical equipment and products, including food, to support the health response. Trade facilitation measures can contribute to the response to the crisis by expediting the movement, release, and clearance of goods, including goods in transit. The World Bank Group provides guidance and technical assistance to developing and least developed countries to implement best practices to facilitate the free flow of goods. This note provides initial guidance on measures: to support business continuity and protection of front-line officers, and to facilitate safe cross-border trade, which includes (i) handling of relief/emergency consignments, (ii) enhanced use of risk management, safe processing of risk passengers and (iii) increased internal and external border agency collaboration. (World Bank)

Key Words: World Bank, COVID-19, Trade Policy

IFC Insights: Ebola-era Lessons for the Private Sector – When Stefan Dercon worked in West Africa at the end of the Ebola epidemic, he witnessed vast disruptions throughout the private sector—and then, as the crisis receded, he tracked how a “new normal” reshaped business practices and economies. As chief economist at the UK’s Department of International Development (DFID), he and his team translated this data into strategic advice to contribute to the region’s economic recovery. Now he’s at Oxford University, as a Professor of Economic Policy at Blavatnik School of Government and the Economics Department. IFC Insights reached Dercon at his home in Oxford to ask him how the lessons of the Ebola epidemic can inform the private sector’s response to COVID-19. The interview has been lightly edited for length and clarity. “ From my experience with the Ebola crisis in Sierra Leone and Liberia, I saw how important it is to collect data to discover how the crisis is working through the economy, and then respond quickly and flexibly to that data. For example, in Sierra Leone, we saw the farmers were not really affected in the way many had predicted, and agricultural markets remained intact while the urban sector was more strongly affected. This real-time data produced better responses from the public sector but also from the private sector, showing where opportunities were. Avoiding the “grand gesture” in favor of a tailored action informed by data is key. We can do this now, better than often is assumed, because of new ways of collecting information—including telephone surveys, mobile phone data, and other digital data. The message to the private sector is to document locally in developing countries how the value chains are affected and where the biggest bottlenecks are, and respond by changing your focus as you go.”  (IFC)

Key Words: IFC, Private Sector, COVID-19

Trade set to plunge as COVID-19 pandemic upends global economy – The wide range of possibilities for the predicted decline is explained by the unprecedented nature of this health crisis and the uncertainty around its precise economic impact. But WTO economists believe the decline will likely exceed the trade slump brought on by the global financial crisis of 2008‑09 (Chart 1). Estimates of the expected recovery in 2021 are equally uncertain, with outcomes depending largely on the duration of the outbreak and the effectiveness of the policy responses. "This crisis is first and foremost a health crisis which has forced governments to take unprecedented measures to protect people’s lives," WTO Director-General Roberto Azevêdo said. "The unavoidable declines in trade and output will have painful consequences for households and businesses, on top of the human suffering caused by the disease itself.” “The immediate goal is to bring the pandemic under control and mitigate the economic damage to people, companies and countries. But policymakers must start planning for the aftermath of the pandemic,” he said.  “These numbers are ugly – there is no getting around that. But a rapid, vigorous rebound is possible. Decisions taken now will determine the future shape of the recovery and global growth prospects. We need to lay the foundations for a strong, sustained and socially inclusive recovery. Trade will be an important ingredient here, along with fiscal and monetary policy. Keeping markets open and predictable, as well as fostering a more generally favourable business environment, will be critical to spur the renewed investment we will need. And if countries work together, we will see a much faster recovery than if each country acts alone."  (WTO)

Key Words: WTO, COVID-19, Trade, Global Economy

PAN AFRICA

Leadership in a time of crisis: lessons for the AfCFTA – To cater for its burgeoning and largely poor population, African leaders needs to focus heavily on manufacturing, and the African Continental Free Trade Agreement (AfCFTA) is the perfect vehicle to develop a regional manufacturing base. While China will fight to reclaim the world, Africa, through the AfCFTA must fight for Africa. Africa needs to do more internally. Developing a regional value chain will comprise bigger industries obtaining their supplies from smaller industries across Africa’s borders. Simultaneously, less-industrialised countries can profit from linking to regional value chains to build capacity and secure higher incomes from value-added industrial production. By reducing trade costs and facilitating investment, AfCFTA makes the development of regional value chains more desirable and easier. Thinking economically is not to underplay the realities of Covid-19, certainly not. But, we do need to think beyond it as well. Africa houses three of the five countries with the highest number of extreme poor in the world: Nigeria, the Democratic Republic of the Congo (DRC) and Ethiopia. One in three Africans live below the global poverty line — a total population that represents 70% of the world’s poorest people. How African countries tackle the pandemic will have major implications for not just physical survival but also the 6,000 Africans who fall into poverty every day, in spite of Covid-19. Africa’s leaders cannot afford to take their eye off the ball of creating economic prosperity for its citizens because when this is over, as it would be, the economic and financial carnage to contend with would be ginormous. (Business Day)

Key Words: AfCFTA, COVID-19, Regional Integration

African Development Bank Group unveils $10 billion Response Facility to curb COVID-19 – The African Development Bank Group on Wednesday announced the creation of the COVID-19 Response Facility to assist regional member countries in fighting the pandemic. The Facility is the latest measure taken by the Bank to respond to the pandemic and will be the institution's primary channel for its efforts to address the crisis. It provides up to $10 billion to governments and the private sector. Akinwumi Adesina, President of the African Development Bank Group, said the package took into account the fiscal challenges that many African countries are facing. "Africa is facing enormous fiscal challenges to respond to the coronavirus pandemic effectively. The African Development Bank Group is deploying its full weight of emergency response support to assist Africa at this critical time. We must protect lives. This Facility will help African countries to fast-track their efforts to contain the rapid spread of COVID-19," Adesina said, commending the Board of Directors for its unwavering support. The Facility entails $5.5 billion for sovereign operations in African Development Bank countries, and $3.1 billion for sovereign and regional operations for countries under the African Development Fund, the Bank Group's concessional arm that caters to fragile countries. An additional $1.35 billion will be devoted to private sector operations. Commenting on the Facility, Acting Senior Vice-President Swazi Tshabalala said: "The setting up of the Facility required a collective effort and courage by all our staff, Board of Directors and our shareholders." Two weeks ago, the Bank launched a record-breaking $3 billion Fight COVID-19 Social Bond, the world's largest US dollar-denominated social bond ever on the international capital market. Last week, the Board of Directors also approved a $2 million grant for the World Health Organization for its efforts on the continent.  "These are extraordinary times, and we must take bold and decisive actions to save and protect millions of lives in Africa. We are in a race to save lives. No country will be left behind," Adesina said. (AfDB)

Key Words: AfDB, COVID-19, Response Facility

Temporary suspension of import tariffs on medical products and equipment essential amid the COVID-19 pandemic in Africa –Most African countries do not produce medical products and equipment needed to fight the Coronavirus (COVID-19) including soaps or surface-active agents, respiratory masks, protective spectacles, garments, suits and gloves. South Africa is the biggest African producer and exporter of such products but does not produce enough for the whole continent; and it has recently introduced export restrictions of COVID-19 related products[1] including alcohol-based hand sanitizers, face-masks and hydroxychloroquine. African countries are therefore reliant on imports sourced mainly from other non-African countries including China, India, Spain, Switzerland, the European Union (EU) and the United States (US) (International Trade Centre (ITC) TradeMap). According to data reported to the ITC Market Access Map, virtually all African governments impose tariffs on one or more of such products needed to tackle COVID-19 (see Table 1).[2] Most of the countries impose average MFN tariffs between 11%-30%, while others even impose tariffs higher than 31% on these products. Comoros and Sao Tome and Principe levy average MFN tariffs on surface-active agents (e.g. sanitisers) less than 10%; Algeria, Djibouti, Malawi as well as SACU and EAC countries impose duties above 10% but less than 30%; Cabo Verde and Angola impose duties exceeding 30%. On surgical, plastic and rubber gloves Angola and Sao Tome and Principe levy average MFN duties less than 10%, while Algeria, Burundi, Cabo Verde, Zimbabwe, DRC, Comoros, Sudan, Ethiopia, Chad, Kenya, Malawi, Mauritania and Tunisia charge import duties exceeding 10%. Angola and Sao Tome and Principe impose average MFN duties less than 10% on personal protective equipment or clothing; the rest charge tariffs exceeding 10% and are even higher than 30% in Cabo Verde, Ethiopia, Sudan and Zimbabwe. (tralacBlog)

Key Words: Trade, Africa, COVID-19

African Union reaffirms its unwavering support to WHO – The Covid-19 pandemic is already the most serious health emergency in generations, and it is far from over. The Coronavirus pandemic has undoubtedly changed our ways of life; impacted on the capacities of our health infrastructure and has disrupted the economic supply value chain with attendant negative impact on global economies. As the world grapples with the challenge of the Coronavirus, there is a need for solidarity, unity of purpose and better coordination to ensure that we are able to overcome this common enemy.  It is within this context, that the Chairperson of the African Union and President of the Republic of South Africa, HE Cyril Ramaphosa reaffirms his appreciation for the exceptional leadership of the Director-General of the World Health Organization (WHO), Dr Tedros Adhanom Ghebreyesus, from the very earliest stages of this unprecedented global health crisis. The African Union has also commended the management of Dr Tedros in leading the global response to the pandemic.  Overall the AU recognises and appreciates the good work that has been undertaken by the WHO and notes with a sense of satisfaction the various initiatives and measures that are continuously undertaken by the organisation to mitigate the spread of the pandemic such as mobilising resources, sharing the real-time information and providing the technical and material support.  On a daily basis, the WHO has been an essential technical and scientific partner to the African Union and the Africa Centers for Disease Control and Prevention (Africa CDC), as we work to mitigate the pandemic which has now reached nearly every member state. The African Union has seen Dr Tedros in action before when he and the world class WHO health experts led global efforts to fight against Ebola Outbreak in the Democratic Republic of the Congo. In appreciation of these efforts, the African Union extends its unwavering support to the WHO and its Director-General.  The AU calls upon international community to join hands to support the efforts of the DG and the entire WHO family as they lead global efforts to fight this pandemic. If there was a time for global unity, solidarity and cooperation, this is that time. Working together, we will be able to overcome this challenge. (AU)

Key Words: AU, COVID-19, WHO

African Union and African private sector launch COVID-19 Response Fund – Ahead of an expected surge in cases of COVID-19 in Africa, the African Union and the Africa Centres for Disease Control and Prevention (Africa CDC) have launched a public-private partnership with the AfroChampions Initiative, known as the Africa COVID-19 Response Fund. The partnership aims to raise an initial US$150mn for immediate needs to prevent transmission and up to US$400mn to support sustainable medical response to the COVID-19 pandemic by pooling the resources required for the procurement of medical supplies and commodities. Cyril Ramaphosa, chairperson of the African Union and President of the Republic of South Africa, said, “While we continue to welcome expertise and feedback from regions already engaged in the fight against the coronavirus, we must also establish an autonomous strike force. Other regions in the world are already paying a heavy tribute to Covid 19 and their support will be limited. Therefore African money and African expertise must be mobilised.” The Africa COVID-19 Response Fund is a financial instrument to mobilise and manage funds from the private sector in Africa, and other well-wishers with the support of several African banks. The Fund will operate under the supervision of the African Union through its public health institution Africa CDC, which will determine priority interventions and actions. In addition to medical response, part of the funds raised will be allocated for supporting the most fragile communities, in the least developed African countries, whose socio-economic activities have been impacted significantly by measures taken to mitigate the effects of the pandemic. “There is a race against time to prepare and protect our communities. Africa must fight this as one and no country on our continent should be left behind. We must coordinate efforts of member states, African Union agencies, World Health Organization, and other partners to ensure synergy and minimise duplication. We must also promote evidence-based public health practice for surveillance, prevention, diagnosis, treatment and control of COVID-19,” commented Dr John Nkengasong, director of the Africa Centres for Disease Control and Prevention. (African Review)

Key Words: AU, COVID-19, Private Sector

Tackling COVID-19 in Africa – The COVID-19 pandemic is primarily a health crisis and a human tragedy, but it also has far-reaching economic ramifications. In Africa, it is already disrupting millions of people’s livelihoods, with disproportionate impact on poor households and small and informal businesses—and the pace of this disruption is likely to accelerate in the weeks ahead. No country or community is exempt; in oil-exporting countries, COVID-related challenges are compounded by the collapse of the oil price. Across the continent, leaders in the public, private, and development sectors are already taking decisive action—both to save lives and to protect households, businesses, and national economies from the fallout of the pandemic. But several leaders have told us that they need a clearer picture of the potential economic impact of the crisis. At the same time, many African countries are still in the early stages of organizing their responses into focused, prioritized efforts that make the most of the limited time and resources available. To address these needs and help inform the response of leaders across the continent, this paper presents: An initial analysis of COVID-19’s economic impact, which finds that Africa’s GDP growth in 2020 could be cut by three to eight percentage points. We find that the pandemic and the oil-price shock are likely to tip Africa into an economic contraction in 2020, in the absence of major fiscal stimulus. A framework for near-term action by governments, the private sector, and development institutions to mitigate this impact. These actions are drawn from a global scan of economic interventions already being implemented or considered, plus our recent discussions with public- and private-sector leaders across Africa. Our message is clear. Governments, the private sector, and development institutions need to double down on their already proven resolve—and significantly expand existing efforts to safeguard economies and livelihoods across Africa. In many countries, there is an opportunity to take bolder, more creative steps to secure supply chains of essential products, contain the health crisis, maintain the stability of financial systems, help businesses survive the crisis, and support households’ economic welfare. They also need to consider an extensive stimulus package to reverse the economic damage of the crisis. (Mckinsey)

Key Words: COVID-19, Africa, Mckinsey

The big asks Africa needs to table with the IMF and World Bank: here’s the list – The coronavirus and its economic consequences have caused economic tsunamis in every country in the world. The scale of the onslaught will dominate discussions at the International Monetary Fund (IMF)/World Bank spring meetings due to take place – for the first time ever virtually – in mid April. These virtual meetings will include the G20 Finance Ministers and Central Bank Governors and the body that advises IMF Governors about the management of the international financial system – the International Monetary and Finance Committee. The participants in these meetings will discuss the international community’s response to the global health and economic crisis. They should operate from the premise that no country is immune from the virus and that each country remains vulnerable as long as any country is affected. Many competing interests and views will be expressed at these meetings. Africa will need to advocate forcefully for its interests to make its voice heard. It is critical that the world listens to Africa. It is projected that 450 000 Africans could test positive for the coronavirus by early May. If accurate, this pandemic would be catastrophic for the continent. It would overwhelm African countries’ health systems, devastate their economies and threaten millions of people with unemployment, hunger and homelessness.  South Africa’s role in these meetings is pivotal. The Governor of the South African Reserve Bank Lesetja Kganyago chairs the finance and monetary committee. South Africa is the only sub-Saharan country in the G20. In addition to representing South Africa, therefore, he and Finance Minister Tito Mboweni must use these meeting to advocate for African interests. (The Conversation)

Key Words: IMF, World Bank, Africa, COVID-19

Covid-19 outbreak could be Indian pharma’s big opportunity in Africa – A joint analysis recently conducted by the African Export-Import (EXIM) Bank and the Export-Import (EXIM) Bank of India shows that commercial trade between Africa and India has expanded more than eight-fold (pdf) from $7.2 billion in 2001 to $59.9 billion in 2017. India is currently Africa’s fourth-largest national trading partner. India accounted for more than 6.4% of Africa’s total trade in 2017, considerably higher than 2.7% in 2001. However, Africa still accounts for about 8% of India’s total trade, similar to its share in 2001. Pharmaceuticals are a major component of India’s trade expansion strategy, particularly with the country’s stated objective of a wider diversification of the export profile in terms of both products as well as destinations. Along with other sunrise industrial products like electronics, India’s export push focuses on pharmaceuticals as global demand expands. Indian pharmaceutical industry aspires to become the world’s largest supplier of drugs by 2030. India aims to increase its industry revenue to $120 billion-$130 billion by 2030 from current revenue of $38 billion at a compound annual growth rate (CAGR) of 11-12%. Pharmaceuticals are a major component of India’s trade expansion strategy, particularly with the country’s stated objective of diversification of exports in terms of both products as well as destinations. India’s historical role in supporting a large number of relatively poorer nations—particularly in Africa to reduce their disease burden and deal with HIV, tuberculosis, and malaria through low-cost, generic medicines is widely acknowledged. Pharmaceutical products dominate India’s exports to Africa and along with petroleum products, account for about 40% of total Indian exports (pdf) in African markets. (Yahoo Finance)

Key Words: COVID-19, India, Africa

Afreximbank Announces $3-Billion Facility to Cushion Impact of COVID-19 – The African Export-Import Bank (Afreximbank) has announced a $3-billion facility, named Pandemic Trade Impact Mitigation Facility (PATIMFA), to help African countries deal with the economic and health impacts of the COVID-19 pandemic. PATIMFA, approved by the Bank’s Board of Directors during its sitting on 20 March, will provide financing to assist Afreximbank member countries to adjust in an orderly manner to the financial, economic and health services shocks caused by the COVID-19 pandemic, according to information released by the Bank. It will support member country central banks, and other financial institutions to meet trade debt payments that fall due and to avert trade payment defaults, said Afreximbank. It will also be available to support and stabilize the foreign exchange resources of central banks of member countries, enabling them to support critical imports under emergency conditions. In addition, PATIMFA will assist member countries whose fiscal revenues are tied to specific export revenues, such as mineral royalties, to manage any sudden fiscal revenue declines as a result of reduced export earnings. It will also provide emergency trade finance facilities for import of urgent needs to combat the pandemic, including medicine, medical equipment, hospital refitting, etc. The facility will be available through direct funding, lines of credit, guarantees, cross-currency swaps and other similar instruments, according to Afreximbank. Explaining the rationale for the facility, Prof. Benedict Oramah, President of Afreximbank, noted that the COVID-19 pandemic brought with it considerable suffering and major economic disruptions. “Besides its worrying effect on human life, the pandemic is projected to cost the global economy up to $1 trillion and to result in a significant 0.4 per cent decline in global GDP growth, which is expected to drop from 2.9 per cent in 2019 to 2.5 per cent in 2020,” he said. “A rapid and impactful financial response is required to avert a major crisis in Africa,” he said, pointing out that “Africa is exposed in many fronts, including significant declines in tourism earnings, migrant remittances, commodity prices and disruption of manufacturing supply chains.” (Afreximbank)

Key Words: COVID-19, Afreximbank, Trade Policy

NORTH AFRICA

COVID-19: EIB Loans €440 Million to Morocco’s Private Sector – The European Investment Bank Group (EIB) announced its financial support for the private sector in Morocco, notably through its credit lines with Moroccan financial institutions amounting to €440 million. The loan is intended to assist Morocco in addressing the impact of COVID-19 on the economy. “These credit lines dedicated to financing the private sector would be able to provide working capital and liquidity necessary for businesses to continue their activity,” the EIB said in a press release. In addition to the immediate cash assistance, the EIB has decided to accelerate the disbursement of loans already signed to support small and medium-sized enterprises (SMEs). “[EIB] is ready to further strengthen its support and expertise for the health sector for the acquisition of the necessary medical equipment and the strengthening of health infrastructure,” the EIB said.  “The EIB is strongly mobilized on this funding and we are already in talks with the ministry and our partners to give them all the necessary support.” The European financial institution explained that the objective “is to support the implementation of projects that can help Moroccans concretely and quickly fight on a daily basis the COVID-19 both economically and at the health level.” The financial assistance to Morocco is part of the “Team Europe” network, an initiative of the European Commission that aims to help countries outside the EU face the COVID-19 pandemic. The EIB announced a contribution of €5.2 billion to the network. The EIB Vice-President Emma Navarro said the bank “is more than ever mobilized to help Morocco face this pandemic.” “In the health sector, after having financed the construction and modernization of many hospitals, our objective is to support [Morocco] in the face of significant need for medical equipment,” Navarro said. (Morocco World News)

Key Words: Morocco, COVID-19, Private Sector

EAST AFRICA

Border closures cause delays in moving goods across East Africa – The logistics sector is reeling from the coronavirus pandemic as 31 countries in Africa have imposed full border closures, with the others allowing only cargo and basic goods into their countries. In East Africa, transporters are experiencing increased delays in ferrying cargo from the port of Mombasa due to delays in clearing after Customs officials, Kenya Ports Authority and Kenya Trade Network Agency (KenTrade)—the only state agencies mandated to facilitate cross-border movement of goods—reduced their workforce as a precautionary measure against contracting the virus. Traders facing technical hitches when lodging documents to process their cargo clearance paperwork will have to wait longer after KenTrade suspended operations at its face-to-face customer centre. “We wish to notify our stakeholders that Kentrade will continue to offer the Kenya TradeNet System services to all users. Please note we will not handle any customer at our contact centre office as a precautionary measure to ensure that we minimise the risk of exposure and spread of the virus,” reads a notice from the agency. At the port of Mombasa, stripping of cargo has also decreased after the management reduced the number of shifts from four to two since the introduction of the 7pm-5am curfew in Kenya on March 27. Delays in vessel clearance to dock at the port have also increased significantly after it was made mandatory for all Border closures cause delays in moving goods across the region. In addition, state agencies have reduced their workforce and reviewed operations due to coronavirus fears ships to undergo inspection, and their crew screened for the virus. To address this challenge, Bolloré Transport and Logistics has improvised servicing of clients while observing the country’s Ministry of Health requirements. (The East African)

Key Words: COVID-19, Trade, East Africa

SOUTH AFRICA

COVID-19 affirms urgency of trade facilitation reforms in Angola – The coronavirus (COVID-19) pandemic’s blow to global oil prices has re-emphasized the need for Angola to wean its economy off volatile fuel exports. As companies around the world shut down or slowed production, crude prices tumbled to an 18-year low in March, spelling more turmoil for the Angolan economy, in recession since the 2014-2016 oil crash halted more than a decade of exceptional growth. UNCTAD is supporting, through a project funded by the European Union, the government’s efforts to diversify the economy. The Train For Trade II programme for Angola helps authorities identify promising non-oil sectors, train entrepreneurs and business owners, weigh investment promotion policies and improve trade infrastructure. Tying all the work together is the project’s trade facilitation component. “Diversifying Angola’s economic structure away from its heavy dependence on oil is key to boosting competitiveness and will help the country reduce its vulnerability to external shocks,” said Paul Akiwumi, director of UNCTAD’s division for Africa and least developed countries. The current COVID-19 crisis draws this need into sharp focus, he said. "Angola is rich in natural resources and has many other products to offer consumers across the world. But local businesses struggle to develop and export their products due to slow and costly import and export procedures,” Mr. Akiwumi said, noting that the country’s producers face challenges in moving goods both within the country and across borders. Angola is ranked 177 out 190 countries in the 2020 edition of the World Bank’s Doing Business report, according to which export procedures in the country cost US$240 and take 98 hours, compared to an average of $173 and 72 hours for sub-Saharan Africa. Many of the reforms necessary to improve conditions for Angolan businesses, such as automating customs procedures or creating a single window, are addressed by the World Trade Organization’s Trade Facilitation Agreement, which Angola ratified in April 2019. (UNCTAD)

Key Words: Angola, COVID-19, UNCTAD