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)

Key Words: COVID-19, ECA, Business Outlook

INTERNATIONAL

UK SMEs hopeful for export opportunities as US trade talks begin – The UK and US governments have opened negotiations on a free trade agreement, with hopes high among the SME exporting community that a planned chapter to help the UK’s 5.9 million small businesses will help them to export their way out of the Covid-19 crisis. The first round of talks was launched yesterday by UK international trade secretary Liz Truss and US trade representative Robert Lighthizer via videocall, and will be held for approximately two weeks, involving around 100 negotiators on each side. The UK government says that further rounds will take place approximately every six weeks and will be carried out remotely until it is safe to travel. In her opening comments as discussions began, Truss said: “The US is our largest trading partner and increasing transatlantic trade can help our economies bounce back from the economic challenge posed by coronavirus.”

“We don’t just want any trade agreement. We want an agreement that will work for small business, an agreement that works for consumers and workers, and an agreement that will benefit all regions and nations of the UK,” she added. Total UK-US trade was valued at £220.9bn last year, making up 19.8% of the UK’s exports. The US currently levies £451mn in tariffs on UK exports each year, with food and farming, manufactured goods and textiles seen benefitting most if these are lifted. With some 30,000 UK SMEs already exporting to the US, taking into account their needs when striking a deal will be crucial, according to Mike Cherry, national chair of the Federation of Small Businesses (FSB). “For small businesses, the US is the number one single market of choice for importers and exporters for the next three years, which is why these negotiations are so critical. With our economy likely to be suppressed for some time, we are going to need small businesses that trade to lead the way.” (GTR)

Key Words: UK SMEs, US, Trade

Canadian international merchandise trade, March 2020 –In March, despite Canadian borders remaining open for goods, both imports and exports decreased notably, as the impact of measures to contain the spread of COVID-19 in Canada became evident. With a full month of physical distancing policies in place in April, merchandise trade values are expected to decrease more severely next month. Canada's merchandise exports fell 4.7% to $46.3 billion in March, the lowest level since January 2018. Total imports declined 3.5% to $47.7 billion, a level not observed since October 2017. Both exports and imports were down almost 10% on a year-over-year basis. Canada's trade deficit widened from $894 million in February to $1.4 billion in March. In real (or volumes) terms, March exports decreased 4.8% and imports were down 5.8%.

For both imports and exports, a large proportion of transactions are completed in US dollars, and must be converted to Canadian dollars in the compilation of monthly trade statistics. In the case of a depreciation of the Canadian dollar against the US dollar, the result in the short run is higher trade values in Canadian dollars.  In March, the average value of the Canadian dollar decreased substantially, falling 3.6 US cents compared with the average of February. This represents the strongest average monthly decline in the value of the Canadian dollar since January 2015. When expressed in US dollars, Canadian exports fell 9.2% in March and imports decreased 8.1%. Therefore, had the average monthly exchange rate been relatively stable in March, stronger decreases would have been likely for both exports and imports.(Statistics Canada)

Key Words: Canada, Trade, Business

Facilitating Trade in Services –In 2016, the Government of India proposed negotiations on an agreement to facilitate trade in services to complement the 2013 World Trade Organization Trade Facilitation Agreement in goods. The proposal did not find much support, but plurilateral talks launched in 2017 on various policy areas encompass areas that are very relevant from a services trade facilitation perspective. This paper argues that participating in the current plurilateral talks can do much to achieve services trade facilitation objectives by identifying good regulatory practices. Although elements relevant to services trade facilitation are on the table in the World Trade Organization, there are important gaps. Identifying priorities for complementary international cooperation to facilitate trade in services on a plurilateral basis requires initiatives that bring together governments, services industry associations, and sectoral regulators.  (World Bank)

Key Words: World Bank, Trade, Business

PAN AFRICA

An Assessment of African Governments’ Commitment and Readiness for AfCFTA Start of Trading in light of COVID-19 – This assessment which was completed before COVID-19 struck, showed that despite the euphoria, AfCFTA commitment and implementation readiness of African governments are surprisingly below 50%. COVID-19 now threatens to derail AfCFTA – which is the more reason the continent should press ahead and use AfCFTA as one of the weapons to beat COVID-19 and speed up post-COVID economic recovery.

The rankings by AfroChampions sought to answer two questions: which countries are the most committed to the AfCFTA process. And which countries have the best implementation readiness in terms of trade infrastructure, customs efficiency and access to credit. The most AfCFTA committed country is Rwanda which scores 83.93% on the commitment scale; and the least committed country is Eritrea with a score of 0.85%.

The country with the best implementation readiness is South Africa, with a score of 68% on the implementation readiness scale. South Sudan has the lowest score for readiness. The overall average commitment level of the continent to AfCFTA is at 44.48%; and its overall implementation readiness level is at 49.15%. Some of the most committed countries (such as Ghana, Mali, Togo and Uganda) are not necessarily the most prepared in terms of trade infrastructure, customs efficiency and access to credit for industry. Conversely, some of the least committed countries (such as Botswana, Namibia and Tanzania) performed very strongly in terms of implementation readiness.

A note on the indicators used:

• Commitment to the Free Trade Agreement/Treaty (Signing and ratification of AfCFTA and a publicly accessible national AfCFTA implementation strategy).
• Commitment to Free Movement (Signing and ratification of Protocol on Free Movement of people and country’s Visa Openness).
• Trade Facilitation Readiness (quality of trade-Infrastructure and efficiency of Customs).
• Access to Credit (Ease of Getting Credit and Cost of Credit). (tralac)

Key Words: COVID—19, AfCFTA, COVID-19

Business leaders urge ministers to respect AfCFTA deadline of 1 July – The AU ministerial meeting from 5-6 May is discussing the trade response to COVID-19 and the state of the African Continental Free Trade Agreement (AfCFTA). Ahead of the meeting, a number of business leaders signed a joint letter calling for ministers and heads of state to ensure they stick to the deadline of 1 July for the agreement to come into force. The letter has been written in response to rumours in international media that the AfCFTA date of 1 July will be postponed until next year. The signatories say that there is no legitimate reason to postpone the AfCFTA even if they understand that a staggered approach can be used given current circumstances.

One of the signatories of the letter is Paulo Gomes, former executive director of the World Bank and chair of Executive committee of AfroChampions. The AfroChampions network has been mandated by the African Union to coordinate private sector discussions around the AfCFTA. He said that ministers meeting next week had a duty to respect the current deadline.  "We understand that certain parts of the AfCFTA are sensitive. The rules of origins and tariffs need time but we can start with trading of essential goods. That will send a strong message to the world that we are serious about the AfCFTA and to African businesses. The private sector is the biggest beneficiary of the AfCFTA and with supply chains being disrupted globally, it is even more urgent that we have a functioning system within the continent to create continental supply chains."

In the letter, the signatories acknowledged that governments had been right to ensure that the immediate response was a health one. But the looming crisis is economic and the AfCFTA is an important tool to help stimulate investment and to create African value chains.  (African Review)

Key Words: COVID—19, AfCFTA, Regional Integration

Now, more than ever, we must keep our promise to help Africa trade out of poverty – The pandemic is affecting every sector of every African economy. A year ago, the World Bank's Africa Pulse report forecast sub-Saharan economies to grow in 2019 and 2020 by around 2.8%. Now the bank forecasts that the region will fall into its first recession for a quarter of a century. Yet at the very moment that African economies require both emergency support and the ability to fast rebuild their economies, another insidious threat looms. Protectionist impulses and demands are being rekindled in British politics.  Some are arguing for a new form of self-sufficiency – a sort of autarky that means we in Britain should try to grow our own cocoa, however expensively, so that we are no longer reliant on overseas producers. Others are pursuing protectionism under the guise of well-meaning social and environmental demands.

Whatever the rationale, “protectionist policies would wreak havoc in Africa” according to the UK think tank, the Overseas Development Institute. They would deprive poor countries of their export markets, while leading to tit-for-tat measures against our exporters here in the UK. Protectionist policies would hit British jobs, drive up prices and reduce choice in our supermarkets.Liz Truss, the Trade Secretary, has moved swiftly to galvanise G20 action on trade, instigating a virtual meeting of G20 Trade Ministers where they pledged to ensure that emergency measures are “targeted, proportionate, transparent, and temporary, and that they do not create unnecessary barriers to trade or disruption to global supply chains, and are consistent with WTO rules”.  

The UK is also working within the WTO and Commonwealth to champion a liberal free trading agenda across the world and support developing countries to maintain the benefits of trade for their economies and population – all the more important now that the WTO’s 12th Ministerial Conference in Nur-Sultan, and the Commonwealth Heads of Government Summit in Kigali, both scheduled for June, have been postponed.

Next, we must focus on Africa’s special situation. First, UK Ministers should intensify meetings with experts for advice on how we can keep trade with Africa flowing. Second, the UK and others should target funding urgently for “safe-trade” measures on the continent – such as testing, protective equipment and hand-washing facilities for truckers and officials at key ports and border crossings – being rolled-out by leading development organisations like TradeMark East Africa. Third, we should work with African leaders to chart out a new economic partnership covering trade, green investment and technology, a model the rest of the world can follow to build-back-better. There is much the Government can do to help British companies to export around the world, such as the work being done by the Trade Minister Greg Hands to reduce tariffs. (Politics Home)

Key Words: COVID—19, Africa, Trade

IDEP to host webinar on efficient macroeconomic planning in light of COVID-19 – The Institute of Development and Economic Planning (IDEP) is this Thursday hosting a webinar to provide a platform for high level participants to discuss the various challenges African countries are facing and propose possible tailor-made responses to address efficient economic planning in the context of the ongoing coronavirus (COVID-19) pandemic. The webinar, which will take into account how the COVID-19 crisis might change some of the immediate macroeconomic principles for sustainable development in Africa, will comprise a discussion between the different stakeholders involved in financing development on current and future challenges.

The research webinar will propose technical expertise for planning for sustainable development within the current crisis. Titled Principles of macroeconomic planning: sustainability and health emergencies, the webinar discussion is expected to provide a roadmap for a resource mobilization plan moving forward on the short to mid-term. Panels and experts will discuss a number of topics including current growth rate/regimes and the need to achieve sustainable and inclusive societies in relation to resilient economies; monetary policies, inflation and lending to the economy: the role of the Central Banks; and fiscal measures and the need to restructure economies in line with social and economic goals. (UNECA)

Key Words: COVID—19, UNECA, IDEP

African Development Bank approves €40 million in grants for bridge linking Cameroon and Chad – The Board of Directors of the African Development Bank Group has approved grants worth €40.94 million for the construction of a bridge to connect Cameroon and Chad across the Logone river. The grants, comprising a €20.785 million tranche for Cameroon and €19.215 million for Chad, were approved on 30 April 2020. The facility is from the Investment Facility for Africa under a framework agreement between the Bank Group and the European Commission. The funds will co-finance the costs of construction of the bridge between Yagoua in Cameroon and Bongor in Chad, access roads and feasibility studies, management said in a report to the Board. The bridge, once completed,  is expected to bolster bilateral and sub-regional integration and cross-border trade, safeguard life and property during the river crossing  and boost socio-cultural ties between the two countries. 

“Specifically, the project aims to promote interstate trade, particularly between Cameroon and Chad, reduce travel time and transportation costs, and improve accessibility of basic services by nearby communities,” the report noted. In addition to the Logone river bridge, other projects under the Pillar Assessed Grant or Delegation Agreement (PAGODA) include the rehabilitation of the Lome-Cotonou road, road development and transport facilitation on the Bamako-San Pedro corridor between Mali and Côte d’Ivoire and the rehabilitation of the CU2a community road section in Burkina Faso near the border with Niger. The Bank and the European Commission are committed to co-financing development projects that tackle poverty by investing in critical infrastructure to promote seamless connectivity of transport, energy and ICT.  (AfDB)

Key Words: COVID—19, AfDB, Regional Integration

Africa50 donates US$800,000 to help African countries fight COVID-19 – Africa50, the pan-African infrastructure investment platform, has announced its COVID-19 relief support initiative, which aims to support the continent’s fight against the pandemic. Under this initiative, Africa50 is providing US$800,000 to help contain the spread of the virus and minimise its impact. Given the likely long-term effects of the pandemic, Africa50’s COVID-19 Relief Support Initiative will have three phases: The first phase focuses on helping countries deal with immediate public health needs through in-kind and cash donations. It comprises a US$300,000 grant to the Africa Centres for Disease Control and Prevention (Africa CDC), which will be used specifically for the purchase of test kits and other medical equipment and to mobilize frontline responders, as highlighted in the Africa Joint Continental Strategy for COVID-19 led by the African Union, through Africa CDC.

In addition, Africa50 is donating US$500,000 to fund other targeted infection control and prevention activities in several African countries. The second phase will focus on technology-enabled solutions that help address the unprecedented demand for digital health innovations, which was triggered by the pandemic. To that effect, Africa50 will support the deployment of digital solutions, as part of its Innovation Challenge, an initiative launched in 2019 to increase internet connectivity access in under-served areas in Africa. The third phase will concentrate on medium-to-longer term solutions to support economic recovery and stabilization, including the implementation of major infrastructure projects. (Africa Review)

Key Words: COVID—19, Africa, Investment Policy

Africa: Farmers Show Resilience in Face of COVID-19 Crisis - Smallholder farmers in developing countries are weathering the consequences of the pandemic by finding new business strategies, a new report finds. Smallholder farmers are taking emergency measures to adapt to the COVID-19 crisis and preparing long-term strategies to regain competitiveness, a new International Trade Centre report finds. Farmers are the 'unsung heroes' of the catastrophe, argues the report, showing that 'business as usual' will not be enough in the post-pandemic future. 'These farmers produce food that sustains us and contribute food security,' ITC's acting Executive Director Dorothy Tembo said. 'Meanwhile, they deal with challenges linked to a triple livelihood crisis triggered by climate change, volatile commodity prices and the COVID-19 global pandemic.' The report, Unsung Heroes: How Small Farmers Cope with COVID-19, builds on interviews in 11 countries to describe how lockdown measures and transport restrictions are leading to higher costs; logistical bottlenecks; input, cash flow and supply ruptures; and drops and shifts in demand for small farmers.

As the pandemic spreads, farmer communities are working to protect the health of producers, ensure food security, create solidarity networks for social protection, keep cash flow and investment intact, and make sure that information continues to flow. To compete in the future, they are seeking to diversify their crops and markets, add value, innovate, establish partnerships, cut costs and digitalize their businesses. They are also building alliances for production and commerce, and securing partnerships for more equitable trade. (ITC)

Key Words: COVID—19, Africa, Business

NORTH AFRICA

World Bank approves additional $$20mln to support Tunisia - The World Bank approved on April 30 under an accelerated financing mechanism, the additional disbursement of 20 million to help Tunisia strengthen its health system in this pandemic. Before this new support, Tunisia had obtained $15 million from the institution earlier in April, through the fund of an existing project, namely the Irrigation Agriculture Intensification Project in Tunisia.
The cumulative total of $35 million will provide the Tunisian Ministry of Health with essential medical equipment and supplies to strengthen its capacity for covid-19 response and prevention. According to the World Bank, assistance to Tunisia during the covid-19 crisis is intended to support the government's economic measures, the emergency efforts of the Ministry of Health, including the strengthening of social and social safety nets, assistance to small and medium enterprises and the creation of conditions for economic recovery.

To this end, the institution reports that up to an additional $100 million will be reallocated to finance additional social benefits and grants to small and medium-sized enterprises. World Bank Country Officer Tony Verheijen (photo) said: We are currently working in close collaboration with the Tunisian government to support its health, social and economic measures, using new and existing funds, to help the Tunisian people in overcoming this crisis and in restarting the economy on a strong footing.”(Ecofin Agency)

 Key Words: COVID—19, Tunisia, World Bank

EAST AFRICA

Rwanda most committed to AfCFTA - Rwanda is the country most committed to the African Continental Free Trade Area agreement, a new report, dubbed, The AfCFTA Year Zero Report, has said. The study, which offers a baseline of the continent’s readiness for the start of trade under a continental framework, was published by The AfroChampions Initiative, which was launched by African leaders in January 2017. The initiative, also known as the Afrochampions, is a special implementation vehicle for major, innovative, public-private partnerships to harness big opportunities in Africa for transforming the continent’s best companies and institutions into globally significant players. The report shows which countries are the most committed to the AfCFTA process, and which ones have the best implementation. The least committed country is Eritrea with a score of 0.85 per cent, according to the report. Eastern and West African countries swept all the top nine positions of the most committed countries, with the highest ranked country outside the two regions coming in 10th.

Apart from Rwanda, three other Eastern African countries in the top 10 include Uganda (4th), Kenya (7th), and Djibouti (9th). The five West African countries in the top 10 include Mali (2nd), Togo (3rd), Ghana (5th), Niger (6th) and Senegal (8th). Sao Tome and Principe (10th), from Central Africa, completes the top 10. Notably, not a single country from Southern or North Africa was deemed committed enough to make the top 10. “Rwanda is number one in terms of commitment to AfCFTA, and number two in implementation readiness,” Michael Kottoh, head of strategy and research at Afrochampions, told The New Times. (The New Times)

Key Words: COVID-19, AfCFTA, Rwanda

SOUTHERN AFRICA

Dizzying Capital Flight Entrenched in Malawi's Tourism, Trade Sectors – Malawi's economy is excessively bleeding potential profits and revenue losses due to capital flight and illegal externalisation of foreign exchange in the tourism and trade sectors. RBM spokesperson Mbane Ngwira: Need to verify figures and various details. Nyasa Times can reveal that a special committee that was set-up by the Ministry of Finance in February last year has discovered the illicit conducts that have led to losses in fees and national revenues worth over US$5 billion for the past 6 years. The committee was formed with the objective of cutting out the massive plunder of foreign exchange due to illegal foreign currency externalisation and transfer pricing. As members, it has Reserve Bank of Malawi, the Financial Intelligence Authority, Anti-Corruption Bureau, Directorate of Public Prosecutions, Malawi Revenue Authority, Department of Immigration and the Malawi Police Services.

Most of the investigations conducted point to players in the tourism sector of the country, popularly known as the Warm Heart of Africa, who have established accounts in eastern and western countries where their clients make deposits for travel and tourism packages. "The figure is at US$5 billion now for the past 6 year period but it will definitely increase once we piece together all details. These earnings are not remitted to Malawi and follow-throughs clearly show no records in the accounts of local tourism establishments. "It is a close knitted diabolical scheme whose multiplier effects are stunted growth of the sector, low payments of workers, illegal zero tax charges of those earnings and dwindling progress of the national economy," one of the investigators said.(Nyasa Times)

Key Words: COVID-19, Malawi, Trade