IMPORTANT ANNOUNCEMENT

Insights on African businesses’ reactions and outlook to COVID-19 - The African Trade Policy Centre (ATPC) of the United Nations Economic Commission for Africa (ECA) and International Economics Consulting Ltd., jointly carried out the first comprehensive survey on the COVID-19 pandemic and its economic impacts across Africa in mid-April. There were 210 respondents, made up of a mix of micro, small, medium and large enterprises from across the 54 African countries. The results have highlighted the major challenges that firms are facing due to the current crisis.

Many companies have expressed their concern about the direct impact on company turnover, with the smallest firms expecting to be hit the hardest. The lack of operational cash flow, lower capacity utilisation, disruption in supply chains and decrease in demand may force some businesses to close down, with obvious adverse effect on workers, finds the survey. The survey also finds that access to credit is elusive to businesses of all size, with less than two fifths of requests being granted, while one to two thirds of loan requests are not even offered a response. The hardest hit, again, being the smallest companies. Across the board, enterprises have also signalled their disappointment with their own government responses to the crisis. 

However, the lack of external support has forced companies to come up with novel ways of conducting business. A number of effective measures have been adopted by businesses to mitigate the effects of operating in this new environment, such as adopting technology, working remotely and using e-commerce. Generally, while firms judge the short-term outlook on revenues to be severe, they are more optimistic over a longer time horizon (one year or more). (UNECA)

INTERNATIONAL

Securing access to financial services for vulnerable people during COVID-19 – Managing the COVID-19 health crisis and the economic recovery ahead requires substantial financial resources.NIn addition to dealing with financial concerns at the macro level, such as debt management, policymakers need to consider that the economic fallout from COVID-19 is most severely felt by those who have little or limited access to financial resources. Financial inclusion, in terms of providing access to financial services at an affordable and sustainable cost, must be a key part of governments’ policy response to the current crisis. The current slowdown of economic activity, while necessary to address the health crisis, has led to mass unemployment and tumbling incomes for many, particularly for those in the informal sector. This will be aggravated by the disruption of value chains supplying intermediate and final products and by demand lowered by budgetary pressures on households, firms and governments. Governments are providing liquidity backstop measures to both businesses and households, but the challenge goes beyond envisaging Marshall-like plans and sound financial systems. The most vulnerable and hardest hit by the COVID-19 crisis will also be the ones more likely to have higher barriers to benefiting from this support. These include not having a bank account or having poor access to payment, credit and other financial services. It is these people who need to quickly become beneficiaries of financial inclusion measures. Even prior to the pandemic, financial inclusion was a key development concern. (UNCTAD)

Key Words: UNCTAD, Financial Services, COVID-19

DDG Wolff: Reliance on international trade for food security likely to grow – Virtual Remarks by Deputy Director-General Alan Wm. Wolff -  First let me say that we are happy to be initiating in WTO a trade dialogue on food through these webinars: such a dialogue has never been more timely. Just recently the heads of the WTO, FAO and WHO issued a joint statement in which they warned that: We must ensure that our response to COVID-19 does not unintentionally create unwarranted shortages of essential items and exacerbate hunger and malnutrition. In other words, they cautioned against the COVID crisis turning into a food crisis. Now, it is important to understand that international trade in food is not simply a luxury. The movement of food from the parts of our planet that have a food surplus to the parts that have a food deficit is absolutely critical for global food security. 1 in every 6 people around the world depends almost entirely on international trade to be fed and I want to expand on that.  That’s 17% of humanity or 1.3 billion people. Currently, there are over 30 countries in the world that must rely on imported food, not to increase their food variety, but to avoid starvation.  There are many reasons for this situation that include poor agricultural productivity, and serious land and water limitations.  Many of these countries lie in Africa, and some are in the Middle East.   Globally agriculture uses up around 40% of the global land area, and about 70% of the world’s total freshwater, mostly for irrigation.  International trade in food is trade in land, trade in water and trade in energy.   As the United Nations Development Program tells us, were a country such as Egypt to aim for food self-sufficiency it would need three River Niles not one.   So I hope that this helps our viewers visualize just how critical it is to keep international trade in food flowing.  Trade in food is not a luxury, but a must. Now reliance on international trade for food security is only likely to grow. (WTO)

Key Words: COVID—19, WTO, International Trade

PAN AFRICA

African Leaders Mull 2021 as AfCTA’s New Take-off Date – African heads of state are billed to meet to consider January 1, 2021 as the new implementation date for the Africa Continental Free Trade Area (AfCTA) agreement earlier scheduled to commence on July 1, 2020. The Secretary-General of AfCTA Secretariat, Mr. Wamkele Mene, spoke during a webinar on the “Political Economy of COVID-19: Implications for AfCFTA”, which was organised by the Africa International Trade and Commerce Research and Nigeria Private Sector Alliance. The new timeline followed an assessment of the damage already caused by the COVID-19 pandemic globally and Africa in particular. Also, speaking during another webinar on “Multi-stakeholder and expert dialogue on the impact of COVID-19 on Trade”, which was put together by the acting Chief Trade Negotiator/Director General, Nigerian Office for Trade Negotiations, Mr. Victor Liman, Mene advised Nigeria to quickly tidy up its domestic processes towards the eventual ratification of the AfCTA. Mene warned that its implementation will be speeded up when the current battle with the pandemic is over. He said though COVID-19 had delayed the implementation of the trade agreement, Africa will have to “fast track our implementation of the AfCTA when things get to normal.“I really hope that when Nigeria is ready and has gone through the domestic processes that they need to go through, that Nigeria indeed will proceed to ratify the agreement when you are ready. “Looking at the (COVID-19) destruction in Africa, we know that our supply chain had been significantly undermined and negatively affected by COVID-19.” He also told participants that the Assembly of Heads of States had established a COVID-19 solidarity fund currently valued at about $20 million to aid a coordinated approach for distribution to countries whose health systems are under severe strain. (This DAY)

Key Words: COVID—19, AfCFTA, AU

COVID-19 crisis provides impetus to accelerate African regional integration – panellists, ADI webinar - The global response to the COVID-19 pandemic must be coordinated and targeted at livelihoods to prevent an upsurge in inequality, delegates at an African Development Institute (ADI) webinar urged on Wednesday. “This is an opportunity to re-think macro-economic policy in Africa. We should not go back to our old ways. The sense of urgency that is coming from the crisis must translate into accelerated action on things that will make our continent less dependent on others in times like this. We should aim not only to build back the economy, but to build back better,” the speakers recommended. The delegates called on African leaders to use the urgency created by the pandemic to accelerate investments in implementing the African Development Bank Group’s Hi 5s, accelerate regional integration and deepen local financial markets to withstand future shocks as envisaged under the African Continental Free Trade Area agreement. COVID-19 is spreading quickly in Africa and is already straining the continent’s fragile health systems, economies, trade, cultures, societies and livelihoods. Africa’s public and private sectors, individuals and communities are struggling to respond to the pandemic amid commercial lockdowns and disruption of income sources. It is estimated that Africa will require stimulus worth $110-$150 billion to provide social and economic relief to its economies in the wake of the pandemic. (AfDB)

Key Words: COVID—19, AfCFTA, Regional Integration

U.S. Trade and Investment with Sub-Saharan Africa: Recent Trends and New Developments - This report provides information on U.S. trade and investment with sub-Saharan Africa (SSA). In particular, it analyzes the sectors in which U.S. trade in goods and services with SSA showed the strongest growth during 2016–18; identifies SSA countries for which U.S. exports, imports, and outward foreign direct investment (FDI) increased the most during the period; and highlights the main factors behind this growth. Focusing on several SSA countries, including South Africa, Nigeria, Kenya, Ghana, Rwanda, Ethiopia, and Côte d’Ivoire (called “key markets” in this report), the Commission used case studies to provide in-depth analysis of trends in four important areas: (1) the ways U.S. products and services integrate into key SSA value chains; (2) the intellectual property environment in the key SSA markets, and the effects of that environment on trade and investment; (3) technological innovations in SSA agricultural production and exports; and (4) the digital economy in SSA. In examining SSA’s digital economy, the report explores how the adoption of digital technologies affects other industries and how policies and market conditions affect digital trade.

Further, this report summarizes recent developments in regional integration efforts in SSA, particularly the negotiation and implementation of the African Continental Free Trade Area. It also includes a summary of SSA countries’ utilization of preferential trade provisions under the African Growth and Opportunity Act (AGOA) and an account of the strategies many SSA countries have adopted to take fuller advantage of these provisions.

The report was prepared by the U.S. International Trade Commission (Commission or USITC) at the request of the U.S. Trade Representative (USTR) in a letter received by the Commission on May 6, 2019. (USITC)

Key Words: USA, Africa, Trade Agreement

Call for Applications: Consultancy Service to develop COMESA Regional Guideline/Procedure for advance notification for new non-tariff measures by member states  - The COMESA Trade Facilitation Programme (CTFP) financed under the 11th European Development Fund (EDF) has prioritised “Improved monitoring and resolution of Non-Tariff Barriers (NTBs)”. The Trade Facilitation Programme aims at, among other things, improving trading standards and reducing NTBs; improving effectiveness and transparency of trade processes and systems and improving trade regulatory environment in the COMESA region. It is imperative that an assessment evaluation study be carried out to understand the factors hindering most MS from implementing the requirements spelt out under WTO and other regional Agreements with respect to establishment and operationalization of enquiry points and notification authorities. 

 It is recalled that the European Union and COMESA have signed a 48.3 Million Euros trade facilitation programme on 21 November 2018. The COMESA Trade Facilitation Programme (CTFP) financed under the 11th European Development Fund (EDF) of which, “Improved monitoring and resolution of Non-Tariff Barriers (NTBs)” is one of the priority areas of the CTFP.  The Trade facilitation programme aims at, among other things, improving trading standards and reducing Non-Tariff Barriers; improving effectiveness and transparency of trade processes and systems and improving trade regulatory environment in the COMESA region.  The COMESA Secretariat seeks the services of an individual Consultant to develop COMESA regional guideline/ procedure for advance notification of new non-tariff measures by Member States. (COMESA)

Key Words: COMESA, Trade Facilitation Programme, Regional Integration

EAST AFRICA

Impact of COVID-19 on EAC Trade, EABC Brief -  The EAC Trade and Investment Report 2018, notes that main exports from the EAC in 2018, included minerals (mineral ore, gold and diamond), tea, coffee, cocoa and horticultural products. Similarly, total EAC imports grew by 19.2 percent to USD 38.3 billion in 2018 from US$ 32.2 billion in 2017 . The main source of imports from the rest of the world are Asia and the middle East signifying the importance of countries like China, India and UAE as trading partners. To put this into perspective, according to the ITC Trade Map, EAC imports from China increased by 6 percent from USD 6.9 billion in 2017 to USD 7.3 billion in 2018. On other hand the EAC exports to China increased by 22 percent from USD 1.5 billion in 2017 to USD 1.9 billion in 2018. In 2018, Burundi's key trading partners were the EAC, European Union, United Arab Emirates and China. Total trade with the EAC amounted to US$ 150.9 million in 2018 down from US$ 162.6 million in 2017 and accounted for 15.5 percent of total trade. Burundi’s imports from the EAC were dominated by maize and cement from Tanzania while exports to EAC were especially coffee exported to Kenya and Uganda. Trade with European Union amounted to US$ 143.9 million and accounted for 14.8 percent of total trade while trade with United Arab Emirates amounted to US$ 131.2 million, about 13.5 percent of total trade over the year 2018. Other notable trade partners in 2018 included the COMESA Member States. In Kenya, before the COVID-19 outbreak, the exported fresh produce was valued at approximately Ksh.144 billion per year and Kshs.12.7 billion per month. Additionally, Kenya exported 5000 tons of perishable products per week by air against capacity of 6000tons. Currently, the capacity has gone down to 1500 tons per week against demand of 4000tons. Similarly, in the floriculture subsector, before COVID19, Kenya was exporting 30,000MT of flowers per week. Currently, the industry is exporting 12,000MT per week. This is expected due to the restrictions imposed by various countries as mitigation measures of COVID-19 pandemic. (EAC)

Key Words: East Africa Community, COVID-19, Trade

Uganda starts exporting ARVs to South Africa – Quality Chemicals Limited, Cipla in Luzira has received approval from the South African Health Products Regulatory Authority to start supplying Antiretroviral (ARV) HIV drugs to South Africa. According to Nevin Bradford, CIPLA’s chief executive secretary officer, the company recently dispatched 300,000 packs of ARVs, a combination of tenofovir, emtricitabine efavirenz to South Africa, as part of it’s “Africa for Africa” ambition. In a press statement, Bradford says this consignment marks the beginning of supply that’s expected to spread over the next 12 months and will give South Africans access to quality medicines made in Uganda. “For the first time, a manufacturer from East Africa has received approval to supply ARVs to South Africa,” said Bradford. He adds that the good manufacturing practice approval from the South African regulatory authority not only bestows a vote of confidence in the company but also in Uganda’s pharmaceutical industry as a whole. According to Bradford, guaranteeing the volumes for the next 12 months foreshadows a manufacturing expansion for Cipla into one of the largest pharmaceutical markets in Africa. Cipla is also in the final phases of gearing up to manufacture the antimalarial drug, hydroxychloroquine. This drug is included in the World Health Organization’s solidarity trial, to find a treatment for the coronavirus (COVID-19). According to the 2019 UNAIDS statistics, South Africa has the biggest HIV epidemic globally, with 7.7 million people living with HIV and has the world’s largest antiretroviral programme. Cipla also exports ARVs and other drugs to Kenya, Tanzania, Ethiopia, Malawi, Zimbabwe, Angola, Zambia and Botswana. (Dispatch)

Key Words: Uganda, South Africa, Trade Relations

COVID-19 Dampens Kenya’s Economic Outlook as Government Scales up Safety Net Measures - Kenya’s gross domestic product (GDP) is projected to decelerate substantially in 2020 due to the negative impact of the COVID-19 (coronavirus) pandemic. Economic growth projection remains highly uncertain and the outcome will hinge on how the pandemic plays out internationally and within Kenya, along with policy actions taken to mitigate the situation. The latest World Bank Kenya Economic Update (KEU) predicts growth of 1.5 percent in 2020 in the baseline scenario, with a potential downside scenario of a contraction to 1.0 percent, if COVID-19 related disruptions in economic activity last longer.The government’s immediate action has focused on strengthening the health system which faces an extraordinary challenge to contain the spread of COVID-19 and care for the infected. Further health policy measures such as working from home, travel restrictions, the closure of schools, the suspension of public gatherings, and a nightly curfew, are necessary to delay the spread while the country ramps-up investment in its healthcare systems. Nonetheless, they are also quite costly to the economy by reducing social interaction, production and demand across all sectors. We recognize that Kenya must balance between reducing the spread of the virus and cushioning Kenyans particularly informal workers and youth who make up 70 percent of the population from the adverse economic effects posed by COVID-19,” said Felipe Jaramillo, World Bank Country Director for Kenya. “In partnership with other development partners, we are supporting the Government of Kenya through financing and technical advice to strengthen its health systems capacity to contain the spread COVID-19.”(World Bank)

Key Words: Kenya, COVID-19, Economic Growth

WEST AFRICA

Benin, Mali and Niger eager to tap e-commerce opportunities – UNCTAD’s rapid eTrade readiness assessments conducted in Benin, Mali and Niger found that the three west African countries need far-reaching reforms to seize the benefits of online commerce. Findings of the assessments released on 30 April during the UNCTAD eWeek reveal that the three nations need better infrastructure and e-commerce strategies, as well as capacity-building and improved access to finance for entrepreneurs. The assessments funded by Germany as part of its support to UNCTAD’s eTrade for all initiative call for assistance from development partners to help the countries implement medium to long-term measures to grow their e-commerce sectors which, as in many LDCs, are nascent and mostly hinge on the informal sector. Most payments are still made upon delivery, in cash or via mobile payments, due to the low penetration of financial services and the lack of confidence of consumers, producers and service providers, the assessments note. n Benin, the assessment found a fragile but emerging e-commerce sector being propped up by government efforts. “We see e-commerce not just as a trade accelerator, but also as an important means to overcoming the barriers erected by the COVID-19 pandemic and to ensuring the continuity of commercial activities,” said the country’s minister of industry and trade, Shadiya Alimatou Assouman. Benin’s minister of digitalization, Aurélie Adam Soule Zoumarou, echoed the sentiments, saying: “Mobility restrictions due to the coronavirus pandemic demonstrate the need to intensify digitalization in all sectors of our country.” She said e-commerce could bolster the country’s economic growth. “The report on Benin’s readiness to engage in e-commerce is therefore timely, and we’ll work to implement its recommendations.” (UNCTAD)

Key Words: UNCTAD, E-Commerce, West Africa

Nigeria : Request for Purchase under the Rapid Financing Instrument -Press Release; Staff Report; and Statement by the Executive Director for Nigeria – The Executive Board of the International Monetary Fund (IMF) approved Nigeria’s request for emergency financial assistance of SDR 2,454.5 million (US$ 3.4 billion, 100 percent of quota) under the Rapid Financing Instrument (RFI) to meet the urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic.   The near-term economic impact of COVID-19 is expected to be severe, while already high downside risks have increased.  Even before the COVID-19 outbreak, Nigeria’s economy was facing headwinds from rising external vulnerabilities and falling per capita GDP levels. The pandemic—along with the sharp fall in oil prices—has magnified the vulnerabilities, leading to a historic decline in growth and large financing needs.   The IMF financial support will help limit the decline in international reserves and provide financing to the budget for targeted and temporary spending increases aimed at containing and mitigating the economic impact of the pandemic and of the sharp fall in international oil prices.   The IMF remains closely engaged with the Nigerian authorities and stands ready to provide policy advice and further support, as needed.  Following the Executive Board’s discussion of Nigeria, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued the following statement: “The COVID-19 outbreak—magnified by the sharp fall in international oil prices and reduced global demand for oil products—is severely impacting economic activity in Nigeria. These shocks have created large external and financing needs for 2020. Additional declines in oil prices and more protracted containment measures would seriously affect the real and financial sectors and strain the country’s financing.  (IMF)

Key Words: Nigeria, IMF, COVID-19

SOUTHERN AFRICA

SADC Regional Response to COVID-19 Pandemic - This report provides the global, continental and regional situation of COVID-19.  On the global perspective, the report provides statistics on the global situation where over 2.5 million cases and 187, 705 deaths have been reported as at 25 April 2020.  At the regional level, the report highlights the situation of COVID-19 in the African Region as well as the Southern African Development Community (SADC) region and further provides information on the status of   measures that serve as guidance to Member States. The report notes that of the 5,714 cases reported in the Region, South Africa accounts for about 74% of the cases with Democratic Republic of Congo, Mauritius, Madagascar and the United Republic of Tanzania also recoding over 300 cases to date. In addition to instituting measures to restrict movement and contact, Member States are scaling up testing in response to global calls for increased testing noticed in the last few weeks. Partnerships with private sector and non-state actors to support COVID 19 response efforts are being reported in the Region. The Africa Centre for Disease Control (CDC) has also announced an initiative to scale up testing known as “Partnership to Accelerate COVID-19 Testing”. The objective of the initiative is to distribute 1 million testing kits in 4 weeks and 10 million kits in 24 weeks to Member States in the Africa region. In line with this initiative, the report also provides guidance on scaling up testing and the benefits thereof. Other guidance provided are on maintaining essential services during the period of the pandemic, improving hand hygiene and food handling as well as guidance for schools and workplace settings.  (SADC)

Key Words: SADC, COVID-19, Regional Response

Sacu: COVID-19 costing members states R7bn in revenue every month – The Southern African Customs Union (Sacu) said that its member states were bleeding at least R7 billion in customs revenue every month due to the COVID-19 pandemic. Botswana, eSwatini, Lesotho, Namibia and South Africa have relied on the bloc, which brings in between R88 billion to South Africa down to R8 billion to eSwatini. Sacu executive secretary Paulina Elago said that closed borders had cut trade in some countries to only one percent of normal flows.  In 2018, the five Sacu member states exported goods worth R1.39 trillion, equating to R115 billion per month. Out of the R1.5 trillion in imports, they generated customs and excise revenues of R90 billion. Last year, they shared R120 billion with South Africa receiving R87.7billion, followed by Botswana with R23.7 billion, Namibia R22.3 billion and Lesotho and eSwatini R8.9 billion and R8.3 billion respectively. For Lesotho that is 21% of GDP, for eSwatini and Namibia that is 12%, for Botswana it’s 9% and for South Africa it’s 1% of GDP. But due to closed borders, the Botswana Unified Revenue Service is currently processing less than 1% of the usual cross-border trade volumes while the eSwatini Revenue Authority estimates a decline of 70%. At that rate, which means that of the estimated R10 billion that Sacu would have generated in a month, anything between R7 billion and R9.9 billion is already lost. Sacu's Elago said that it was difficult to quantify the impact now but it would be unprecedented. (Eye Witness News)

Key Words: SACU, COVID-19, Trade

Republic of Mozambique : Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Mozambique – The Executive Board of the International Monetary Fund (IMF) approved a disbursement under the Rapid Credit Facility (RCF) of SDR 227.2 million (about US$ 309 million at today’s exchange rate) to help Mozambique meet urgent balance of payment and fiscal needs stemming from the COVID-19 pandemic. The pandemic is expected to have a significant impact on Mozambique’s economy, interrupting a nascent recovery following two powerful tropical cyclones that struck in 2019. Significant disruptions are emerging in services, transport, agriculture, manufacturing and communications coupled with a much worse external environment affecting export-oriented sectors, such as mining. To mitigate the impact of the pandemic and preserve macroeconomic stability, the government has taken several steps to increase health spending, strengthen social protection to the most vulnerable and support micro-businesses and small and medium-sized enterprises. The Bank of Mozambique has reduced the policy rate and provided additional liquidity in both local and foreign currencies to the financial market. The weakened macroeconomic outlook and deteriorating fiscal situation have created urgent external and fiscal financing needs. The IMF financial support will make a substantial contribution toward fulfilling the needed increases in health spending and other social safety nets.  (IMF)

Key Words:  Mozambique, COVID-19, IMF

Covid-19: Technical team set up to review local industrial sector - A technical team will be set up to conduct a review of the industrial sector of Mauritius as well as propose recommendations for the consolidation of the local industry. It will comprise representatives of the Ministry of Industrial Development, SMEs and Cooperatives, Mauritius Export Association, Business Mauritius, Economic Development Board, Mauritius Chamber of Commerce and Industry, Association of Mauritian Manufacturers, SME Mauritius and Mauritius Cooperative Alliance. This announcement was made, yesterday, by the Minister of Industrial Development, SMEs and Cooperatives, Mr Soomilduth Bholah, at the second Standing Committee meeting set up to evaluate the impacts of Covid-19 on businesses and the manufacturing sector, held at the seat of his Ministry, at Newton Tower in Port Louis. During the meeting, the Minister as well as all stakeholders from the aforementioned institutions, agreed on the urgency to rethink the future of the manufacturing sector and discussed possible short-term actions. Both sides, moreover, highlighted the importance of exploring opportunities to enable the modernisation of the local industrial sector to boost productivity and increase competitiveness. Consequently, the technical team will be called upon to present its recommendations to the Standing Committee. For Mr Bholah, it is crucial to promote e-commerce which has emerged as a thriving business activity during the Covid-19 pandemic. He also indicated that various owners of SMEs have availed of the facilities set up by the Government. (Government of Mauritius)

 Key Words:  Mauritius, COVID-19, Industrial Sector