INTERNATIONAL

Post COVID-19: More regional trade and shorter supply chains? - As policy debates and boardroom deliberations continue to unfold, the likely upshot will be shorter supply chains, more emphasis on regional trade and less reliance on a single trade partner. This could have big implications for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP provides a logical platform for responding to some of the risks arising from COVID-19. China and the United States are the predominant trade and investment partners for CPTPP members. Given the economic importance of both countries and the challenges inherent in relocating supply chains, this trend won’t dramatically change overnight. But since neither China nor the United States are currently parties to the CPTPP, the agreement is a useful vehicle to achieve greater trade and investment diversification. It, and the pending RCEP agreement, allows East Asian members to fortify relationships closer to home, rather than across the Pacific.

As a self-selected, voluntary grouping of economies ostensibly committed to promoting trade and investment among members, the CPTPP could provide some degree of insulation against the surge of export restrictions. With the CPTPP positioned to take on greater relevance in the post-COVID-19 world, membership will expand. Although some domestic opposition has arisen, Thailand is predicted to be first up, but several other countries including South Korea, Indonesia and the Philippines have also indicated interest. Japan seems to be the informal new member recruitment manager, with Japanese officials already working closely with their Thai counterparts on the mechanics of accession. Japan’s role is not a matter of happenstance. Japanese officials now understand the dangers of overreliance on a single market. Japan relies on China for about 37 per cent of its imports of automotive parts and 21 per cent of its imports of intermediary goods overall. (hinrich foundation)

Key Words: Regional Trade, COVID-19, Investment Policy

National trade facilitation committees lead reforms, respond to COVID-19 - Trade facilitation reforms are at the heart of countries’ responses to the economic slowdown, disruptions to global supply chains and shutdown of businesses due to COVID-19. More than ever, countries have recognized the need to implement reforms to ease the flow of critical goods and services, such as medical supplies and key agricultural products, across borders, while managing the pandemic’s economic consequences.

A new UNCTAD study underscores the critical role of national trade facilitation committees (NTFCs), the primary trade facilitation coordination mechanism, in helping countries implement impactful trade reforms to fight the pandemic. “National trade facilitation committees are the right platform to bring together public and private sectors not only to address current bottlenecks to trade caused by the pandemic, but also to prepare for recovery,” said Shamika N. Sirimanne, UNCTAD’s director of technology and logistics. The committees help establish contacts, coordinate actions, advise in negotiations and lead in mobilizing resources for trade facilitation projects. In the wake of the coronavirus pandemic, some NTFCs have coordinated the establishment of trade information portals to ease trade by simplifying and explaining procedures and processes as well as COVID-19 emergency measures. (UNCTAD)

Key Words: UNCTAD, COVID-19, NTFCs

Foreign direct investment and global value chains in the wake of COVID-19 – The COVID-19 pandemic has posed an unprecedented challenge to global value chains (GVCs), hampering the supply of raw materials, intermediate inputs, and final goods.  Governments around the world are scrambling to contain the outbreak that has hit hard major GVC network hubs, including China, Europe, and the United States. The closing of factories, disruptions in transport, and rising concerns of essential supplies are directly affecting how companies operate across the globe with risks to global employment for years to come.  Shocks have already spread from directly hit sectors to others,  and are spreading from across regions through supply linkages. The worst may be yet to come. Vulnerability to COVID-19 may be highest in countries not yet severely affected, including developing countries with weak health systems and small open economies highly reliant on international trade and investment.

At the epicenter of this turmoil are multinational corporations—companies that made investment decisions to fragment and relocate production, in a process that has shaped the geography of global value chains over the last three decades. These enterprises account for 22% of global output and contribute about 70% of total trade—particularly in sectors highly involved in global value chains, such as motor vehicles, electrical equipment, chemicals, and electronics. Multinationals also contribute a substantial share of employment. U.S. multinationals alone employed 42.3 million workers worldwide in 2016 and represent 22% of total private industry employment in the United States. Multinational companies in the Netherlands created approximately 1.4 million full-time jobs in 2014—almost 20 % of all full-time jobs created in the country. In China, multinationals employ more than 26 million workers, accounting for 6.4% of total urban employment. (World Bank)

Key Words: FDI, COVID-19, Global Value Chains

How investment policies are responding to COVID-19 –Countries are putting in place a variety of investment policies in response to the coronavirus pandemic, according to a special issue of UNCTAD’s Investment Policy Monitor released on 4 May. Such policies include facilitation and retention of investment, providing incentives, financial support to crisis-affected companies, supporting local small and medium-sized enterprises (SMEs) in supply chains, as well as protecting national security and public health through foreign investment screening. The monitor documents and analyses how investment policies are responding the crisis, expected to slash global foreign direct investment (FDI) flows by up to 40% during 2020-2021, according to the most recent UNCTAD Global Investment Trends Monitor.

“It shows the global spread of COVID-19 is also impacting the negotiation of international investment agreements (IIAs). National and international investment policies can and should contribute to tackling the devastating economic and social effect of the pandemic. Above all, they can incentivize production of medical equipment and drugs, facilitate administrative procedures, provide equity capital to struggling companies and ensure that foreign takeovers are not contrary to the national public interest” says Dr. Mukhisa Kituyi Secretary General of UNCTAD. Fiscal and financial support for companies and employees are at the core of economic policy responses to the pandemic, with countries tapping a variety of investment policy instruments at their disposal to manage the crisis. (UNCTAD)

Key Words: COVID-19, Investment Polices, Global Trade

Conservation in crisis: ecotourism collapse threatens communities and wildlife - From the vast plains of the Masai Mara in Kenya to the delicate corals of the Aldabra atoll in the Seychelles, conservation work to protect some of the world’s most important ecosystems is facing crisis following a collapse in ecotourism during the Covid-19 pandemic. Organisations that depend on visitors to fund projects for critically endangered species and rare habitats could be forced to close, according to wildlife NGOs, after border closures and worldwide travel restrictions abruptly halted millions of pounds of income from tourism. Throughout the pandemic, scientists have repeatedly urged humanity to reset its relationship with nature or suffer worse outbreaks. But the economic consequences of the Covid-19 lockdown have raised fears of a surge in poaching, illegal fishing and deforestation in life-sustaining ecosystems, with tens of thousands of jobs in the ecotourism sector at risk around the world.

“It’s right that the global focus now is on protecting human lives in this devastating pandemic. However, in the places we work, we are already witnessing its economic impact, particularly in areas where communities rely heavily on ecotourism for their livelihoods,” said Mike Barrett, executive director of science and conservation at WWF UK. In Cambodia, three critically endangered giant ibis were killed for meat in early April following the collapse of the local tourism industry, according to the Wildlife Conservation Society. In central Africa, measures to shield mountain gorillas from the virus have resulted in a slump in vital visitor revenue. Twelve rangers who guarded Virunga national park, where the gorillas live, were killed in eastern Democratic Republic of the Congo last month. “It could be years before these places can fully recover, increasing the risk that people come to rely on other activities to make a living, putting unsustainable pressure on natural resources,” Bartlett said. “Additionally it is currently much harder to monitor land grabbing and illegal poaching.” (The Guardian)

Key Words: COVID-19, Wild Life Trade, Economic Growth

PAN AFRICA

ECA Media Invitation: A global debate on Africa's COVID-19 lockdown exit strategies – The United Nations Economic Commission for Africa (ECA) is pleased to invite you to attend a high level virtual debate on Africa's COVID-19 lockdown exit strategies on Thursday7 May 2020, at 11:30 am Addis Ababa time.

Governments across the world are now confronted with the major challenge of putting in place appropriate exit strategies to come out of COVID-19 lockdown measures. The United Nations Economic Commission for Africa estimates that one full month of lockdown across Africa would cost the continent about 2.5% of its annual GDP (US$65 billion). In effort to limit the spread of the virus, at least 42 African countries implemented partial or full lockdowns. Several factors will undoubtedly affect each country’s exit strategy. Further, any exit strategy will need to balance the preservation of lives, whilst alleviating economic challenges and continuing to suppress the spread of the virus. Some countries are beginning to announce their plans to exit and the debate around the benefit of lockdowns continues. This debate will centre on the policy choices, challenges and risks facing governments in identifying appropriate lockdown exit options. (UNECA)

Key Words: COVID—19, ECA, Trade

Digital trade the only tool for Africa’s economic recovery - Africa Continental Free Trade Area secretary-general Wamkele Mene said he had gone back to the drawing board to review his priorities post the COVID-19 pandemic and digital trade may be the only way to awaken the sleeping giant. Mene has recommended that the launch of the trade zone that was planned for 1 July should be postponed due to the COVID-19 pandemic, but he believes it’s the only tool for economic recovery on the continent. Eyewitness News spoke to Mene on Monday, who said he and his team were now waiting for heads of state and government to say yes or no to this recommendation, and for Ghana, the seat of the secretariat, to reopen its borders, also closed due COVID-19, for them to move into their new offices. "The first few weeks have been very challenging because I was sworn in on the 19th of March and the African Union shut down the following week, and so my vision of establishing the secretariat has been transformed by COVID-19. Some of the priorities have been changed. Industrial development, intellectual property and how they can be of service to public health is also now a priority. So I’ve had to go back to the drawing board as a result of COVID-19."

Mene said operationalisation of the trade zone must now include trade tools to fight not just COVID-19, but other pandemics that would come in future.  He said a lot of time-consuming outstanding work still needed to be concluded, but one of the difficulties was that all countries needed translation for all communication sent to them and back to the secretariat. He said usually, trade negotiations required countries to meet in one place for two to three weeks at a time, but that was not possible for the foreseeable future. Established blocs like the Southern African Customs Union (Sacu) and the Economic Community of West African States (Ecowas) are expected to collectively make their offerings to the AfCFTA but this process is now delayed.  "Sacu and Ecowas are customs unions – they have to agree on products that they are offering to one negotiating party. They move as a collective, and between them it is a bilateral negotiation. But that process is quite detailed domestically and regionally because all members of that customs union must be in agreement. If a country is in a customs union there is no other way to come to a joint offer other than negotiating internally as a customs union, and then Sacu presents to Egypt or to Ecowas."

Mene said while Sacu and Ecowas had not concluded their offers, they were both at advanced stages of their internal processes, and they would have concluded in April, in time for the May summit that AU chairperson President Cyril Ramaphosa was expected to host. He said digitisation was already a priority before for the AfCFTA before COVID-19, and its advantages were even more pronounced now. He said the African Union was already working to develop digital trade infrastructure to enable the trade agreement to be effectively implemented. "I’m talking from a customs point of view and for goods-in-transit, it’s very important to establish trade facilitation digital platforms but we don’t have them yet at the pan-African level, which is what we are striving towards and this crisis has underscored the need for us to accelerate that work and rely more on digital trade platforms," said Mene. (EWN)

Key Words: COVID—19, Economic Recovery, AfCFTA

The Impact of Regulations on Investment in Mobile Telephone Infrastructure in Southern African Development Community Countries – The main objective of the study was to investigate the impact of policy regulations on investments in mobile telecommunications network infrastructure in all the 15 member countries of the Southern African Development Community (SADC) region. The research employed panel data econometrics to achieve its stated objective. Estimated results shows that the coefficient of gross domestic product (GDP) per capita is positive and statistically significant, implying that an increase in this variable results in increase in demand and this in turn motivates infrastructure investment in mobile telephone. The coefficient on the previous level of mobile telephone infrastructure investment variable (Invkt-1) was found to be positive and statistically significant. This means that there is a systematic positive association between the previous level of mobile telephone infrastructure investment and the current. The coefficient of the main variable of interest representing mandatory unbundling (Regkt) was found to be positive and statistically significant. This implies that, overall, mandatory unbundling access regulation boost infrastructure investment in mobile telecommunication. Regression estimates shows that the coefficient on one of the variable of interest, political constraint (POLCON) has a negative and statistically significant impact on determining the level of mobile telephone infrastructure investment in SADC countries. Whilst this result is against expectations, one possible explanation may be presence of high level of rent seeking behaviour. (AERC)

Key Words: COVID—19, Investment Policy, SADC

Ireland latest country to join the African Development Bank – Ireland has joined the African Development Bank Group after its President Akinwumi Adesina's formal declaration of the country's membership. Founded in 1963, the African Development Bank is a regional multilateral development bank focused on reducing poverty, improving living conditions for Africans and mobiliseing resources for its economic and social development.  Headquartered in Côte d'Ivoire, membership of the bank now comprises 54 African countries and 26 non-African countries. Ireland has become the 81st country to become a member (27th non-regional member). Finance Minister Paschal Donohoe said the move was an important addition to the ever-deepening ties that continue to inform Ireland's relationship to Africa and its people. 

"The African Development Bank and the African Development Fund play an important role in fostering sustainable and inclusive social and economic growth and prosperity, helping the African continent to realise its potential to be the continent of promise and opportunity," Mr Donohoe said.  "I see our membership as an investment in this potential. Ireland's partnership with these important regional multilateral institutions will both advance our shared development priorities and will open future opportunities for Irish businesses in the region," he added. Tánaiste and Minister for Foreign Affairs and Trade Simon Coveney said that membership of the Bank will further strengthen the role Ireland plays in sustainable and inclusive development in Africa. 

"Ireland’s membership also comes as the African Development Bank provides crucial support to countries' Covid-19 response," he said. "Ireland's African Development Bank membership is also an important expression of our commitment to, and investment in, the multilateral system and of our contribution to peace, security and sustainable development in Africa.  This partnership will help us reach the furthest behind first," he added. (RTE)

Key Words: COVID—19, AfDB, Ireland

NORTH AFRICA

Le Monde: Morocco Major Global Exporter of Face Masks – Morocco’s face mask production allows the country to be an important exporter in the global market of protective medical gear amid the COVID-19 pandemic, reported French newspaper Le Monde on Friday, May 1. Morocco currently produces 7 million masks per day. The production exceeds national demand and allows the country to export masks to the hardest-hit European countries, such as Spain and France. In March, the Moroccan Ministry of Industry announced several textile companies would start exclusively producing face masks and protective gear to protect the public from the COVID-19 pandemic. “The initiative [was a source of] pride for Moroccans and admiration of politicians around the world,” Le Monde commented. Quoting Morocco’s Minister of Industry Moulay Hafid Elalamy, Le Monde revealed that 34 Moroccan companies are currently manufacturing face masks, including five that are exporting half of their production to Europe.

The Ministry of Industry will give more export authorizations to Moroccan production units in the coming weeks, given the number of requests from foreign countries, the newspaper added. After the launch of face mask production in Moroccan factories, the ministry quickly fixed their retail price at MAD 0.8 (nearly $0.1) per mask in Morocco to prevent fraud and speculation. The ministry also developed a supply plan to make face masks available in 66,000 sales outlets across Morocco and avoid any shortage.

On April 7, after Morocco’s production of face masks became sufficient to meet national demands, the Moroccan government made wearing masks in public spaces and in the workplace mandatory. (Morocco World News)

Key Words: COVID—19, Global Export, Morocco

EAST AFRICA

Regional Business Council Calls for Free Movement of Goods in EAC Partner States – WITH the outbreak of Covid- 19, the East African Business Council has advised the East African partner states to consider allowing free movement of both essential and non-essential goods within and outside the region. The outbreak of coronavirus has increased restriction on the movement of goods and people across borders threatening the livelihoods of traders and their families, and reduced revenue for partner states. Also, this has caused a significant disruption in the global value chains with China being the hub of manufacturing for most business operations. The EACBC said in its report on the impact of Covid-19 on trade that the spillover effect of this disruption has been felt by other African economies and largely by East African businesses being suppliers and importers of goods and services in the global economy.

As part of the immediate recovery strategy, the EACBC counseled partner states to consider full liberalisation of open skies for free movement of cargo within and out of EAC. Also that member states look for alternative markets for EAC imports and exports to reduce dependency on a few countries. On average, EAC countries source 6 per cent of their total imports from the region, and supply 20 per cent of their total exports to the region. The cross border trade has emerged as a remedy that could reduce this adversity through flow of essential goods like food, medical supplies and other hygiene products. "Its importance to the economies of EAC is due to the characteristic nature of crossborder trade being conducted informally and mostly occupied by the vulnerable, small, unregistered traders," the report said adding that this contribution is estimated to account to an average of 50 percent of the Gross Domestic Product (GDP) in EAC economies. (Daily News)

Key Words: COVID—19, East Africa, Business

Ethiopia moves ahead of Nigeria, offers tax relief to firms affected by COVID-19 – In reaction to the economic crisis, triggered by the coronavirus pandemic, Ethiopia has offered tax relief to companies affected by this. According to a report from Bloomberg, this was disclosed by the state television station, which cited Ethiopia’s Minister for Finance, Eyob Tekalign. While citing the Finance Minister, the Ethiopian Broadcasting Corporation reported that companies with interest payment and penalties on outstanding taxes due between 2015 and 2018 would have them cancelled and the underlying tax due could be paid in instalments.

In addition, companies affected by the coronavirus pandemic would get relief for four months of income tax. The Ethiopian Government would also grant a one-month grace period on payment of value-added and turnover tax payments. The television station announced that companies that paid their taxes in lump sums would receive 10% discounts, and those that were donating to the COVID-19 response fund would get 20% discount. Meanwhile, in a similar situation,  Nigeria’s Federal Inland Revenue Service (FIRS), a few days ago, had offered a waiver on interests and penalties for tax debtors, if they paid the outstanding tax arrears in full, on or before May 31, 2020. (Niarmetrics)

Key Words: COVID—19, East Africa, Business

40% of EAC businesses uncertain of continuity amid COVID-19 – Over 40 per cent of the businesses in the East African Region are uncertain of their business continuity six months from now due to the COVID-19 pandemic, a survey by the East African Business Council has shown. The survey showed that the pandemic and measures to curb it have generated substantial uncertainty for business which could result in closure of business and investments. 41.2 per cent of the respondents said that their business maybe not sustainable for more than 6 months while 29.4 per cent said their business may sustain between 6 months and 1 year.

 Only about 11 per cent of businesses said their business will be able to sustain for between one and two years if the situation of COVID-19 pandemic continues. However, the business council figures that the challenges could be mitigated through the planned stimulus packages for most affected businesses as well as the central bank’s lending facility to commercial banks. For instance, Rwandans are awaiting a new special fund for business recovery in May, it is expected that there will lead to further liquidity in the financial market. The uncertainty further poses challenges to employment across the region, risking undoing any gains made over the years.

With the uncertainty of the economic conditions and possible stagnation, 45.5 per cent of enterprises in the region that they are still yet to decide on the fate of their staff in regard to lay-offs. 36.4 per cent have decided to lay off staff and 18.2 per cent said they will not lay off their staff. Laying off of staff will have multiple effects on EAC economies including a decline of disposable income and consequently reduced consumption. Reduce consumption means that industries would in turn produce less, source less raw materials.  (The East African)

Key Words: COVID-19, EAC, Business

WEST AFRICA

Digital solutions offer hope for Nigeria as it begins phased easing of Covid-19 lockdown – The majority of African states closed their borders in response to Covid-19, restricting the movement of workers and creating severe delays in the cross-border transportation of freight: it has been estimated that the volume of goods moving across the region has dropped by a third. As a result of supply chain disruptions, the price of a bag of imported rice – a principal staple – rose by more than 7.5% in Abuja and Lagos between mid-March and early April, while the cost of domestically produced rice increased by around the same amount. In combination with movement restrictions, such disruptions are also denting domestic agricultural capacity, with some farmers unable to sell their crops or obtain supplies. The crisis has highlighted the importance of having stable intra-continental imports and exports, and action is being taken across Africa in response. For example, the East African Community recently issued new guidelines aimed at simplifying the movement of goods between its member states.

Digital solutions are also increasingly being applied, both to combat Covid-19 and to streamline logistics in general. Nigeria was already leading the way in the digitalisation of logistics processes. For example, start-up Kobo360 has helped to drive digitalisation and improve efficiency in the transport and logistics sector since it was founded in 2017.  Kobo360 uses an Uber-like app to connect cargo and truck owners with drivers and customers. In addition, it gives drivers real-time information about weather and traffic, while also helping them choose safe routes. Under normal circumstances, the company says that its blockchain-enabled platform can reduce the time it takes to drive from Lagos to Kano, a distance of 1000 km, from one week to three days.  (Oxford Business Group)

Key Words: COVID—19, Nigeria, Trade

Manufacturers, construction companies to receive waivers from Lagos State during lockdown ease-up phase – The Lagos State Government said it is willing to grant conditional waivers to manufacturers and construction companies that may wish to operate beyond the stipulated hours allowed for free movement during the gradual lifting phase of the COVID-19 lockdown.

According to a statement by the Lagos State Government which was issued via Twitter, construction and manufacturing companies can extend their operations till 6pm, while other companies are still required to end operations by 3pm. The Lagos State Government had earlier directed that companies wishing to reopen on May 4 could only operate within the hours of 9am and 3 pm. However, that earlier directive has been relaxed in a bid to encourage faster economic recovery in the state. This notwithstanding, movements during this gradual unlocking period will still be under the Government’s strict supervision. In the meantime, it appears all relaxation centres and other related businesses will remain shut for now until a review is done. (Nairametrics)

Key Words: COVID—19, Nigeria, Business

SOUTHERN AFRICA

Angola eyes former coffee glory for more sustainable growth– Angola produced 8,000 tons of coffee in 2017 – a fraction of the more than 230,000 tons it produced annually in the early 1970s when it jockeyed with Côte d’Ivoire and Uganda for the title of Africa’s top exporter.  The country aims to reclaim its former glory as part of efforts to diversify an economy that has become highly dependent on oil exports. Coffee grown in Angola’s lush, green highlands once provided half of its foreign exchange earnings – until the nation fell into a decades-long civil war after winning independence from Portugal in 1975. Within a decade, production had collapsed and oil had stolen the show.

When conflict ended in 2002, the nation’s oil reserves gave the economy a kickstart, igniting breakneck growth that continued for more than a decade thanks to high market prices. Fuel came to represent over 97% of total exports. “Angola’s growth in GDP was remarkable,” said Paul Akiwumi, director of UNCTAD’s division for Africa and least developed countries, “although it was too dependent on one commodity and has proven to be unsustainable in the long term.” Growth hit the brakes in 2014 when oil prices crashed and the economy spiralled into recession.  Hope for recovery has been dashed by the havoc wreaked by the COVID-19 pandemic – global demand for oil hit a 25-year low in April. (African Business)

Key Words: COVID-19, Angola, Sustainable Growth

Botswana to slowly end lockdown – Botswana has intentions to slowly open up the economy following a five weeks lockdown, ending on Thursday, to fight COVID-19 pandemic. The country's legislators will convene an emergency parliament meeting on Wednesday to discuss new regulations expected to usher in opening of businesses and schools, under strict supervision. According to proposed regulations, presented by President Mokgweetsi Masisi to parliament on Tuesday, the Southern Africa country wants to gradual allow businesses, traders or school to operate after satisfying Health Services Director or any authorized official that they will prevent the spread of COVID-19.

"From 8th May, 2020 until 20th May, 2020 at midnight during this phase of the lockdown and for the remainder of the state of public emergency, a trade, business or school may operate where it has satisfied the Director of Health Services, or any person authorized by the Director for that purpose, of its ability to prevent the spread of COVID-19, including the following," said the planned regulation. Some of the proposed interventions that institutions and entrepreneurs are expected to put in place include checking of body temperature of all persons accessing the trade business or school, and where a person's body temperature is 37.4 degrees Celsius. The new regulations will demand any person with body temperature above the stipulated level shall not be allowed to access the trade, business or school premises and the person shall be referred to the Health Services Director.  (Xinhua Net)

Key Words: COVID-19, Trade, Economy