INTERNATIONAL

DDG Wolff: Time to start planning for the post-pandemic recovery – While policy measures that may aid in the recovery are not the top priority for most governments at present, it is expected that they may be needed within a matter of weeks.  Trade restrictions did not cause the Great Depression of the 1930s and trade restrictions certainly did not cause the plummeting of international trade during the coronavirus.  Shocks to supply and a fall of demand were the principal factors.  Nevertheless, trade restrictions contributed to the economic downturn in both cases, mercifully so far to a much lesser extent in the current crisis.  But as was true from 1934 onward, trade liberalization played an important part in the economic recovery. There a number of ways in which trade can be facilitated.  Those that suggest themselves for inclusion in any list of potential measures to aid in the recovery: Trade Facilitation Agreement Implementation.  Progress has been made toward this objective.  It is, as one would expect, not uniform.  An assessment should be made of current progress and deficiencies should be addressed.  For LDCs and developing countries this may require receipt of substantial additional technical assistance which will in turn entail substantial funding by international financial institutions.  Much of the implementation will be digital, and here the digital divide must be overcome. Tariff reduction and elimination.  The clearest fiscal policy tools for which trade ministers have responsibility are the conditions for imports and exports.  In a world of global value chains, which may be damaged and reduced but are on the whole unavoidable if both Adam Smith and David Riccardo’s teachings are not to be tossed into an intellectual dustbin, making trade more costly makes little sense.  Exports of a very large number of goods are dependent on inputs from a variety of sources.  Testimony to this fact is available from the CEO of a major German producer of ventilators, which sources components from half a dozen different geographically diverse and distant sources.  (WTO)

Key Words: WTO, COVID-19, Economic Recovery

ITC launches COVID-19 dashboard and offers free access to Market Analysis Tools – The International Trade Centre has launched a new dashboard to monitor temporary trade measures adopted by governments responding to the global COVID-19 pandemic. At the same time, ITC has announced that it would offer free access to its trade statistics and company data to support companies during the crisis. Both initiatives will help micro, small and medium-sized enterprises (MSMEs) and policymakers make well-informed decisions during the coronavirus emergency. Dorothy Tembo, ITC acting Executive Director, said: ‘The new ITC dashboard and the free access to our trade statistics and company data represents one of ITC’s immediate contributions to transparency of trade data and intelligence during this unprecedented period. This initiative will provide information necessary to support the continued flow of vital medical supplies and equipment, critical agricultural and food products, and other essential goods and services across borders, for those most in need’. To date, more than 50 countries have relaxed import measures such as customs duties on imported medical supplies. At the same time, however, more than 80 countries have adopted export bans or restrictions in response to the COVID-19 pandemic. Goods covered include medical supplies – such as facemasks, medical ventilators, and medications based on hydroxychloroquine.  A significant concern for global development is that several major supplying economies are imposing emergency export restrictions on food commodities. This could negatively reverberate on global trade flows and hike commodity prices, provoking food shortages, especially in vulnerable regions of the world. (ITC)

Key Words: ITC, COVID-19, Market Analysis Tools

Trade and COVID-19 Guidance Note - Do’s and Don’ts of Trade Policy in the Response to COVID-191 –Measures to streamline trade procedures and facilitate trade at borders can contribute to the response to the crisis by expediting the movement, release, and clearance of goods, including goods in transit, and enabling exchange of services. Reforms can be designed to reduce the need for close contact between traders, transporters and border officials so as to protect stakeholders and limit the spread of the virus, while maintaining essential assessments to ensure revenue, health and security. Interventions to sustain and enhance the efficiency of logistics operations may also be critical in avoiding substantial disruption to distribution networks and hence to regional and global value chains.  Experience from previous global and food crises provides some guidance for appropriate trade responses during the crisis and those that are likely to undermine effective national and global responses. However, the speed, scale and nature of this crisis are unprecedented which requires thinking outside of the normal box by analysts and exceptionally brave steps from policy-makers. There are however, some positive measures that governments can take to ameliorate the impact of the current crisis.  (World Bank)

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

See Trading Opportunities Like In 2008, Says Andrew Holland - The current equity market will see lots of small rallies, giving participants trading opportunities both on the upside and downside, similar to that seen in 2008. That’s according to Andrew Holland, chief executive officer of Avendus Cap Alternate Strategies, who sees a lot of pain ahead for companies even as India starts talking about going back to work in phases. “The problem remains that yes, you may be okay for the next three months, but what happens after that?” he said in an interview with BloombergQuint. “That’s what the market will start taking in after some point.” People are unlikely to change habits quickly after the lockdown ends, he said, speaking about a bounce back in economic activity. While there will be a small bump, India’s recovery will be U-shaped rather than V-shaped, and a painful one for industries, he said. “We need to see what demand is like and then look at industries and their PEs (price-to-earnings ratios)...It doesn’t matter how low your interest rates are. If you can’t pay your debt, you can’t pay your debt,” he said. “Till then we need to sit on the sidelines and not get so excited and optimistic, unless we get the whole picture. But that's not likely till 2021”. (BloombergQuint)

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

PAN AFRICA

COVID-19 IN AFRICA:  A call for coordinated governance, improved health structures and better data – Home to over a billion people, public health systems across the continent will quickly be overwhelmed if the virus takes hold. The COVID-19 pandemic is a wake-up call for improving Africa’s still weak health structures and related institutional capacity, such as education, infrastructure or national security. It also highlights the urgent need to strengthen data and statistical capacity, notably in relation to health and civil registration. In this publication, the Mo Ibrahim Foundation analyses Africa’s readiness and capacity to manage the COVID-19 pandemic. It draws on a wealth of data, statistics and information from the Ibrahim Index of African Governance (IIAG) and other sources to examine the current COVID-19 context and its immediate challenges. In providing this analysis, the Foundation aims to present a clear and accurate picture, highlighting where efforts can be concentrated in the management and mitigation of this health crisis on the continent.   The paper focuses on the current health landscape and related challenges, while considering the road ahead. COVID-19’s global reach will have a huge economic and wider impact on the entire African continent. Occurring later, it will isolate Africa from other recovering regions. On the continent, the pandemic will widen inequalities within and between countries, worsen already existing fragilities, restrict employment and investment prospects, and potentially fuel additional domestic unrest and conflicts. This requires immediate attention, and calls for adequate, coordinated responses.   (MO Ibrahim Foundation)

Key Words: Africa, COVID-19, Health Data

Africa: over 500 million mobile-money users expected in 2020 – With 50 million new accounts created on the continent in 2019 and a 12% increase in registered users, Africa is by far the leading continent for mobile-money services. However, growth is uneven from one region to another. According to statistics from a new report from the GSMA trade body, Sub-Saharan Africa continues to outpace other regions when it comes to mobile-money services. In 2019, 50 million sub-Saharan Africans created a mobile-money account via a mobile phone, representing a 12% increase compared to 2018 and bringing the total number of users up to 469 million across the region. An estimated 181 million of them are active users. The total value of the 23.8bn transactions carried out in 2019 exceeds $456bn, representing a nearly 28% jump compared to 2018 and proving that sub-Saharan Africa beats all records in the sector, as this figure is 3.5 times the value of transactions recorded in South Asia, the second-highest ranked region in terms of mobile-money services. Sub-Saharan Africa, which has 144 mobile-money services to date, has also been the driver behind the global rise of the sector since 2009. “At that time, there were already a few players like M-Pesa who demonstrated that demand was strong for these services, and that persuaded others to launch their own ventures,” says Sylvain Morlière, head of mobile financial services at Sofrecom, a telecommunications consultancy firm. Within the region’s borders, the growth of mobile-money services has nevertheless been uneven. (The Africa Report)

Key Words: Africa, Mobil Money, COVID-19

For Sub-Saharan Africa, Coronavirus Crisis Calls for Policies for Greater Resilience – The COVID-19 (coronavirus) outbreak has set off the first recession in the Sub-Saharan Africa region in 25 years, with growth forecast at-5.1% in 2020 from a modest 2.4% in 2019, according to the latest Africa’s Pulse, the World Bank’s bi-annual analysis of the state of the region’s economies. “Due to deteriorating fiscal positions and increased public debt, governments in the region do not have much room for wiggle in deploying fiscal policy to address the COVID-19 crisis,” said Albert Zeufack, Chief Economist for Africa at the World Bank. “Africa alone will not be able to contain the disease and its impacts on its own; there is urgent need for temporary official bilateral debt relief to help combat the pandemic while preserving macroeconomic stability in the region.” The Sub-Saharan Africa (SSA) region paid $35.8 billion in total debt service in 2018, 2.1% of regional gross domestic product (GDP), of which $9.4 billion was paid to official bilateral creditors (about 0.7% of the regional GDP). Given that the region may need an emergency economic stimulus of $100 billion—including an estimated $44 billion waiver for interest payments in 2020—the report notes a debt moratorium would immediately inject liquidity and enlarge the fiscal space of African governments. The analysis estimates the pandemic could cost the region between $37 billion and $79 billion in terms of output losses for 2020. The impact on household welfare is expected to be equally dramatic with welfare losses in the optimistic scenario projected to reach 7% in 2020, compared to a non-pandemic scenario. Additionally, COVID-19 has the potential to create a severe food security crisis in the region, with agricultural production contracting between 2.6% and 7% in the scenario with trade blockages. Food imports would decline substantially (as much as 25% or as little as 13%) due to a combination of higher transaction costs and reduced domestic demand. (World Bank)

Key Words: COVID-19, World Bank, Sub-Saharan Africa

NORTH AFRICA

IMF invests $3 billion to fight covid-19 in Morocco –Morocco received on April 7, 2020, an amount of $2.97 billion from the International Monetary Fund (IMF) to limit the social and economic impact of the covid-19 pandemic. The fund will also be used to maintain an adequate level of official reserves to ease the tensions on the balance of payments, according to the IMF. This financing is not within the framework of the $50 billion envelope recently announced by the IMF to help countries in difficulty to manage the consequences of covid-19. The North African country activated its last precautionary and liquidity line obtained from the multilateral institution in December 2018. This facility had been granted as useful insurance against external risks. Although Morocco has already signed several agreements of this type with the IMF since 2012, this is the first time it has made effective use of it. In this covid-19 crisis, the country's authorities have taken a series of measures to increase health spending and support businesses and households. According to data from the Office of the High Commissioner for Planning, published on 8 April 2020, the country's GDP is expected to fall by 1.8% in the second quarter of this year. Moreover, the widening external deficit that is taking shape, due to a sharp decline in exports, tourism revenues and remittances from the diaspora is another shock to the economy. In this circumstance, the facility that the Moroccan authorities have just activated will make it possible to maintain some stability in foreign exchange reserves. (Ecofin)

Key Words: Morocco, COVID-19, IMF

EAST AFRICA

Ugandan start-ups part of the solution during COVID-19 – Being locked at home with borders sealed, seeing transport halted and curfews imposed, the all-too-familiar consequences of COVID-19 are being felt in Uganda as well. Increasing market uncertainty has meant decreasing revenues for many small businesses. However, a few innovative enterprises are doing their best to turn this crisis into an opportunity – not only to keep themselves afloat, but also to help consumers and other businesses ride out the pandemic with as little pain as possible. As many business-to-business clients shut down temporarily and others reduced their demand, Online Butchery saw a radical reshaping of their clientele. Chief Executive Tony Ayebare reports that while Online Butchery has lost many of their traditional customers, their business has seen an unexpected leap as well. “The start-up’s business-to-consumer meat orders have skyrocketed overnight – from 10 orders a day to 150 a day in just two weeks.” He says. ‘More people realize they can now buy meat without leaving home, which bonds well with one of our objectives of being a household name when it comes to meat and meat products,’ Ayebare said.  They are now providing a new service called ‘prepaid meal plans’ to support Ugandans who are now facing the task of cooking every meal of the day at home. For a weekly or monthly fee, clients can get lunches and dinners delivered right to their door. Business is also booming for Bringo Fresh. Their online platform allows people to order fresh, organic produce and have it delivered to their doorsteps. Orders began to climb immediately after the first COVID-19 case was confirmed in Uganda, and the size of each order has grown by about 150%, says public relations officer Lysandra Chen. In a show of solidarity, the start-up dropped its delivery fee to better serve their community in this time of need. “We are also buying more from our farmers and engaging with more farmers on our database, so we plan to do more with our farmers after the pandemic.” Chen said. (ITC)

Key Words: Uganda, COVID-19, ITC

Ethiopia Likely to Host East Africa COVID-19 Response Centre – Ethiopia is likely to host a centre for one of the task forces to be established across the continent of Africa in response to the spread and impact of Novel Coronavirus (COVID-19) pandemic. The decision of establishing five centres in Africa comes after the African Union Bureau of Heads of State & Government held a teleconference last week with chiefs of the WHO and CDC-Africa."What they told us was extremely concerning," said Cyril Ramaphosa, South Africa's President and chairperson of the Africa Union (AU). (The bureau comprises leaders of Egypt, Kenya, DRC and Mali as well as Moussa F. Mahamat, commissioner of the AU. However, in the teleconference other speakers from Rwanda, Senegal, Ethiopia and Zimbabwe have participated. "It confirmed the need to act swiftly and to undertake extraordinary measures," said Ramaphosa. At 1,749, his country has the largest number of confirmed cases, representing one tenth of the infection in the continent. There have been 492 Coronavirus related fatalities on record, of which the largest number comes from North Africa, one of the five regions the AU targets to open response task forces. They are meant to oversee screening, detection and diagnosis; infection prevention and control; clinical management of infected persons; and communications and community engagement. Last February, the CDC-Africa established the Africa Task Force for Novel Coronavirus (AFCOR) to coordinate preparedness and responses across the continent. The continental task force has six technical working groups, focusing on surveillance to risk communications. Its creators hope AFCOR will provide strategic direction on how to implement continental strategy and what kind of priorities need to be taken in consideration for prevention and controlling of COVID-19. The five regional task forces are tasked with coordinating between the member states, identifying the priority and activities in each region with the continental team. (Addis Fortune)

Key Words: COVID-19, Trade, East Africa

WEST AFRICA

Coronavirus seen as trigger for mobile money growth in West Africa – Mobile money providers across Africa have reduced or waived transaction fees and governments are encouraging digital payments to reduce person-to-person contact and potentially slow the spread of the virus. In West Africa, where mobile money is growing fast but still used by only about one in four adults, industry experts and analysts said the outbreak could be an opportunity to increase usage and include more people in the digital economy. "I think right now there is a really key trigger point, and that could be seized on to leap forward," said Jill Shemin, an independent consultant on digital finance in West Africa. Mobile money has been hailed as a way for people excluded from the formal financial system - including women, youth and the rural poor - to access services such as savings and loans, start businesses and receive payments. In East African countries such as Kenya, Uganda and Tanzania, it is already the currency of choice for everything from daily shopping to paying bills, driven largely by the success of Safaricom's service M-Pesa. But mobile money arrived later in West Africa, where barriers include low literacy and lack of trust as well as lack of necessary documents and a preference for cash, according to the telecoms industry group GSMA. While coronavirus has given people a new incentive to go digital, operators have also lowered barriers by making it cheaper and in some places easier to sign up, said analysts. "I do believe this could be a catalyst for high adoption," said Ruan Swanepoel, head of the GSMA's mobile money programme, citing government efforts to encourage digital payments and ease regulation as deciding factors. In one example, Ghana's central bank announced that all mobile phone subscribers could open a mobile wallet and transfer up to 1,000 cedis ($170) daily without providing additional documentation. Required documents such as ID and proof of address vary by country but can be a barrier particularly for women to open accounts, said Sabine Mensah, regional digital lead for the United Nations Capital Development Fund (UNCDF). (Thomson Reuters Foundation)

Key Words: COVID-19, West Africa, Mobile Money

Strong fiscal regime needed after coronavirus pandemic – An Economist, Prof. Godfred Bopkin, says Ghana needs a strong fiscal regime to withstand external shocks after the Coronavirus outbreak.  According to him, government needs to critically look at taking advantage of its local production and manufacturing sectors to fortify its fiscal regime and revive the economy. Speaking in an interview with GhanaWeb, Prof. Bokpin said; “The ability of middle-income countries like Ghana to jumpstart their economy post COVID-19 depends on a strong fiscal regime and I believe that is what the Finance Minister, Ken Ofori-Atta is critically looking at”. “But if we’re not careful to ask for a debt relief now and this phase of the pandemic is over, these same countries particularly China will benefit more by turning Africa practically into consumers once they’re able to turn a corner around this pandemic because China already has a competitive advantage,” he cautioned. Meanwhile in an earlier report by Databank Research, Ghana’s fiscal deficit is expected to end this year at 4.9%± 0.5% of GDP which excludes Bank of Ghana’s bailout funds. This is against the government’s initial target of 4.7% of GDP.  “Against our expectations of public expenditure and revenue dynamics, we forecast the overall fiscal deficit at 4.9% ± 0.5% by end-2020 (Government Target: 4.7% of GDP),” the report said. Recently, Finance Minister, Ken Ofori-Atta, disclosed that Ghana’s economy will lose GH¢9.5 billion due to the outbreak of the novel Coronavirus pandemic. According to him, this will represent 2.5 percent of Ghana’s revised Gross Domestic Product (GPD). (Ghana Web)

Key Words: Ghana, COVID-19, Business

CENTRAL AFRICA

IMF Staff completes Discussions for a US$115 Million Disbursement to Chad in response to the COVID-19 Pandemic – IMF staff completes discussions for emergency access to the Rapid Credit Facility to help Chad address the economic challenges posed by the COVID-19 pandemic. Mr. Edward Gemayel, Mission Chief for Chad at the International Monetary Fund (IMF), made the following statement: “IMF staff completed discussions with the authorities for a disbursement by mid-April of US$115 million. This will allow the authorities to meet the urgent budgetary and balance of payment needs stemming from the deterioration of the global economic conditions and the spread of COVID-19 in Chad. The authorities hope that the IMF financial support will help catalyze much needed financial support from other development partners. “The outbreak of COVID-19 is having a severe economic and social impact on Chad and could jeopardize the gains achieved in recent years under the current Extended Credit Facility (ECF) arrangement. Economic activity is projected to slow sharply, and large fiscal and external financing needs have emerged. Containing a spread of the pandemic will put pressure on a weak health system and entail additional spending in the health sector, under the National Contingency Plan for the preparedness and response to the COVID-19 pandemic. Measures to prevent the spread of the virus have created hardship for households and businesses. “The authorities have taken strong actions to mitigate the impact of the pandemic by closing schools, suspending flights, and banning public gatherings. They are currently putting together a comprehensive economic plan to upgrade the health system and contain the economic impact of the pandemic. “The IMF team would like to thank the Chadian authorities for the candid and constructive discussions. The mission had working sessions with Mr. Tahir Hamid Nguilin, Minister of Finance and Budget, and a team from the Ministry of Finance and Budget.”  (IMF)

Key Words: IMF, COVID-19, Central 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: COVID-19, UNCTAD, Angola