IMPORTANT ANNOUNCEMENT

Initiative on Model Provisions for Trade in Times of Crisis and Pandemic in Regional and other Trade Agreements – Following the raft of ad-hoc trade measures taken by countries in response to the COVID-19 crisis, the United Nations has put in place a new initiative to develop model provisions to promote more trade cooperation and predictability in times of crisis and pandemic – and speed up recovery. This initiative is coordinated by the ESCAP and is jointly being implemented by UNCTAD and the 5 United Nations Regional Commissions (ECA, ECLAC, ESCAP, ESCWA and ECE) in cooperation with WTO, CUTS, International Economics Consulting Ltd. and several other organisations as well as Universities, including Ibadan University in Nigeria. A Core Expert Group has been put in place to guide the initiative and support delivery of an online (living) Handbook on Provisions for Trade in Times of Crisis and Pandemic in Regional and other Trade Agreements.

As a first step towards developing the Handbook, a 45-day Policy Hackathon will be organized starting June 2020, enabling all interested trade negotiators and experts from governments, academia, think tanks, international organizations, and civil society to contribute to this challenging endeavor. All relevant contributions by participants will be made available through an online repository under their authors’ or their organizations’ names. 

Deadline for application to participate is 29 May 2020 and selected participants will have 45 days, starting 8 June 2020, to contribute innovative solutions towards ensuring that the collective benefits of trade arrangements are least compromised in a situation of crisis and pandemic. For more information, visit the event website https://bit.ly/2TkOXUr and register here https://bit.ly/2XcGVyh. (UNECA)

COVID-19 and African businesses: Focus on Mauritius - 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. The results and findings of the survey for Africa were published here (https://www.uneca.org/sites/default/files/PublicationFiles/eca-iec_survey_covid-19_africa_english_final.pdf).

With a view to provide further insights to the Mauritian sector, we are publishing a second report, with an emphasis on businesses operating in Mauritius. Among the respondents to the continental-wide survey, 84 were from firms having their operations in Mauritius, either at national or international level. The results have highlighted the major challenges that firms are facing due to the current crisis.

Most companies not operating outside of Mauritius expected a drop in demand for products and services, whereas companies operating in Mauritius and in other African countries expressed their concerns about having difficulties in having an operational cash flow. While a shortage in supplies are affecting all companies, micro enterprises are fearing the worst, going as far as business closure.

The survey also finds that most Mauritian based companies have turned to commercial banks to improve their working capital. Although companies that trade have a higher success rate as compared to their local counterparts. The public sector is seen as the sole other port of call for liquidity for firms operating only on the Mauritian market.

Generally, Mauritian firms seem relatively satisfied with the responses offered by the government to the crisis, although they would like to see a postponement in tax payments and wage subsidisation.

The silver lining in this crisis situation is that Mauritian businesses seem to be prepared for extreme situations. While companies engaged in exports are adapting themselves by developing new strategy and products, companies in Mauritius alone have been working remotely. With a view to provide business continuity, this unique situation has forced companies to adopt new technologies. (UNECA)

INTERNATIONAL

ACI and IATA Outline Roadmap for Aviation Industry Restart – Airports Council International (ACI) World and the International Air Transport Association (IATA) have called on governments to ensure any new measures introduced for airports and airlines in the wake of COVID-19 are supported by scientific evidence and are consistent across the world. The aviation sector has been brought to a standstill and a balanced and effective restart and recovery depends on collaboration among the key participants in the global aviation ecosystem.

ACI and IATA have jointly issued a paper laying out a pathway for restarting the aviation industry - Safely Restarting Aviation - ACI and IATA Joint Approach. Airlines and airports have cooperated to build a roadmap for resuming operations which reassures the travelling public that health and safety remain the overall priorities. The joint approach proposes a layered approach of measures across the entire passenger journey to minimize the risk of transmission of COVID-19 at airports and onboard aircraft, and to prevent aviation becoming a meaningful source of international re-infection. Such measures should be globally consistent and subject to continued review, improvement, and removal when no longer required, to ensure an even recovery.

ACI and IATA are both central members the COVID-19 Aviation Recovery Task Force (CART) being led by the Council of the International Civil Aviation Organization (ICAO). CART enables the collaboration - among governments and between governments and industry -that is vital to ensure the harmonization and consistency of measures that are essential to restoring air connectivity and passenger confidence in air travel.

“Airports and airlines have come together with ICAO and the wider aviation industry to address the biggest challenge ever faced by commercial aviation in restarting a global industry while continuing to halt the spread of COVID-19,” ACI World Director General Angela Gittens said. “There is currently no single measure that could mitigate all the risks of restarting air travel but we believe a globally-consistent, outcome-based approach represents the most effective way of balancing risk mitigation with the need to unlock economies and to enable travel.”

IATA’s Director General and CEO Alexandre de Juniac said, “Safety is always our top priority and that includes public health. Restoring air connectivity is vital to restarting the global economy and reconnecting people. Our layered approach of measures recommended by airports and airlines safeguard public health while offering a practical approach for a gradual restart of operations. It is important to remember that the risk of transmission on board is very low. And we are determined that aviation will not be a significant source of re-infection. We are working continuously with governments to ensure that any measures put in place are done so consistently and with scientific backing. That is key to restoring public confidence so the benefits of safely re-starting aviation can be realized.” (IATA)

Key Words: ACI, IATA, COVID-19

Major interventions needed to backstop trade recovery, warns ICC – ICC has warned that proactive government interventions will be needed to ensure the market can power an economic rebound in the wake of the COVID-19 crisis.

• ICC estimates a possible US$ 5 trillion of trade credit will be needed to enable a rapid recovery from the COVID-19 crisis
• Business body warns that trade financing gaps risk hampering a global recovery – impacting the survival chances of small businesses
• Despite early scaling of support measures in response to COVID-19, further public backing for trade credit needed to prime conditions for a trade-driven economic rebound

In a new paper issued today, ICC estimates that as much as US$ 5 trillion in market capacity will be needed to return trade volumes close to 2019 levels in 2021. With the World Trade Organization projecting that the effects of COVID-19 could cause merchandise trade to drop by over 30% this year, ICC has cautioned that a rapid economic recovery will only be possible if sufficient credit is available to bring trade close to its pre-pandemic trend over the next 18 months.

Despite impressive early actions taken by commercial banks and public bodies in response to the initial phase of the crisis, ICC has called on policymakers to proactively scale support for trade finance transactions to prime the market ahead of demand returning to the global economy. To this end, the global business organization has identified four priority interventions that, if properly calibrated, could immediately bolster financing capacity – ranging from large scale purchases of low-risk trade assets to free up banks’ balance sheets to providing targeted capital relief for trade transactions under global financial stability rules, known as Basel III.

ICC Secretary General John W.H. Denton AO said: “We see a risk that the impacts of COVID-19 could compound longstanding gaps in the provision of trade finance – potentially leading to a chronic shortage of the very credit that will be needed to power a rapid economic rebound. The scale of financing needed to support a 2021 recovery is truly unprecedented, with our estimates suggesting that as much as US$ 5 trillion will be needed to restore merchandise trade close its pre-pandemic level. While governments are naturally focused on the immediate dimensions of the COVID-19 crisis, decisions taken in the coming months will determine the shape of any future recovery.

“We see a strong case for proactive interventions to prime the trade finance market in anticipation of demand returning to the global economy. Such measures should form a central part of on-going efforts to help small businesses weather the COVID-19 crisis – given that access to cost-effective trade credit is a vital lifeline for many entrepreneurs. To achieve the scale of support potentially needed, we are calling on G7 leaders to turn their attention to this agenda at their virtual summit meeting next month.”(ICC)

Key Words: ICC, Trade Recovery, COVID-19

WCO partners with stakeholders to launch a COVID-19 Trade Facilitation Repository -In the wake of the ongoing COVID-19 outbreak, characterized by the World Health Organization (WHO) as a pandemic on 11 March 2020, countries around the world have been adopting a series of trade and border protection measures to try to contain the spread of the disease across borders. Such measures have had immediate and severe impacts on economic activities and caused major disruptions in supply chains. Given that trade facilitation is a key policy tool that can help countries mitigate some of the impacts of the COVID-19 pandemic, the WCO has partnered with the WTO, UNCTAD, the CSSO, the GATF, IATA and ITC to develop a COVID-19 Trade Facilitation Repository in which all these actions are consolidated.

The repository acts as a platform that consolidates the initiatives on trade facilitation adopted by organizations and stakeholders, seeking to provide access to these resources in a unique and user-friendly database. It contains a useful listing of all such initiatives broken down by organization, type of measure and subject matter. As the situation evolves and further actions are taken, the platform will be expanded to include other key actors working in the area of trade facilitation.

Since the beginning of the COVID-19 pandemic and its unprecedented sanitary and economic effects, the WCO and other international organizations, NGOs, business associations and other representative entities have redeployed resources to develop new instruments, tools and guidance materials on trade facilitation measures. These documents can be a useful source of information for countries to learn from each other, share best practices and experiences and provide inspiration to design targeted policy responses. However, these resources were scattered throughout a multitude of platforms. This initiative will assist in ensuring that the seamless flow of safe cross-border trade continues, especially with regard to essential goods which are crucial for fighting the COVID-19 pandemic. The COVID19 Trade Facilitation Repository can be accessed via the following link and will be updated regularly to reflect new guidance material developed. (WCO)

Key Words: WCO, Trade Facilitation, COVID-19

WTO goods barometer flashes red as COVID-19 disrupts world trade – The Goods Trade Barometer provides real-time information on the trajectory of world merchandise trade relative to recent trends. The current reading captures the initial phases of the COVID-19 outbreak, and shows no sign of the trade decline bottoming out yet. This measure is consistent with the WTO's trade forecast issued on 8 April 2020, which estimated that world merchandise trade could decline by between 13% and 32% in 2020, depending on the duration of the pandemic and the effectiveness of policy responses.

All of the barometer's component indices are currently well below trend. The automotive products index (79.7) was weakest of all, due to collapsing car production and sales in major economies. The sharp decline in the forward-looking export orders index (83.3) suggests that trade weakness will persist in the short-run. Declines in the container shipping (88.5) and air freight (88.0) indices reflect weak demand for traded goods as well as supply-side constraints arising from efforts to suppress COVID-19. Only the indices for electronic components (94.0) and agricultural raw materials (95.7) show signs of stability, although they too remain below trend.

Trade had already been slowing in 2019 before the pandemic, weighed down by persistent trade tensions and weakening economic growth. WTO trade statistics show that the volume of world merchandise trade shrank by 0.1% in 2019, marking the first annual decline since 2009, during the global financial crisis. Trade was relatively weak in the final quarter of 2019, but this is unlikely to have been influenced by COVID-19, which was first detected very late in the year. (WTO)

Key Words: WTO, World Trade, COVID-19

Is the pandemic bringing back industrial policy? – Supply chain shocks and other economic dislocations precipitated by the COVID-19 pandemic have pushed ostensibly market-oriented countries to consider – and in some cases implement – dirigiste policies that would have seemed inconceivable prior to the pandemic. Even the United States has resorted to the “heavy hand” of government in directing private sector production of medical supplies. Utilizing a seemingly moribund Korean War-era defense production law, the Trump administration in March began ordering a number of leading companies — including General Motors, 3M, and General Electric — to produce ventilators and face masks.

The U.S. federal government has also intervened to block exports of medical supplies. Meanwhile, legislation is being considered in Congress that would require certain critical supplies to be purchased from U.S. sources only, and deliberations on similar policies continue in the White House. The pandemic appears to be breaking down the longstanding taboo in the United States against what is loosely referred to as “industrial policy.” Typically, industrial policy refers to a highly proactive and interventionist effort by the government to guide the development of particular sectors of the economy (if not the entire economy). Common policy tools include direct and indirect subsidies, protection from foreign competition, preferential access to capital, implicitly or explicitly guaranteed purchases, and mandates from government on production, and import and export decisions. By definition, industrial policies are strongly nationalistic and are intended to fortify domestic production capabilities. For decades, the term “industrial policy” has held extremely derogatory connotations in the United States. It conjured images of feckless Soviet-era bureaucrats dictating how many shoes would be produced and was contrasted unfavorably with the dynamism of the U.S. economy, where the market – not bureaucrats – called the shots.

The eventual collapse of the Soviet economy seemed to permanently stamp “failure” onto any notion of industrial policy, at least in the minds of Washington policymakers. (This is more than a little ironic, given that the economic development of the United States was significantly driven by what could be considered industrial policies from the founding of the country until the middle of the 20th century.) (hinrich foundation)

Key Words: Industrial Policy, Trade, COVID-19

How science, technology and innovation can help build resilience to multiple shocks – Science, technology and innovation (STI) have a critical role to play in building resilience to multiple shocks. First, technologies, particularly digital technologies, have played a vital role in empowering and giving a voice to people, including those most vulnerable. They extend access to education and health, assess and monitor the health and environmental risks, connect people within and outside the communities, and enable early warning systems. When disasters unfold, people immediately turn to the social media platforms they are most familiar with to both seek and share information.

Second, innovation is the key driver of diversification and economic development, which increases the ability of economies to adapt to shocks and thrive. And innovation is critical for economies to adapt and continue functioning at times of crises. An example was the quick move to remote forms of working in many knowledge-intensive sectors during the COVID-19 pandemic. Transition to e-commerce - Many businesses have also transitioned to e-commerce to keep operating. In Senegal, for instance, the government has facilitated this transition by fast-tracking the implementation of e-commerce policies and reforms, based on recommendations of UNCTAD’s eTrade readiness assessment.

Third, new technologies and innovative products and services hold the promise of decoupling economic development from environmental degradation, and promoting sustainability. A new development is citizen science, which uses the latest technologies to engage volunteers to carry out tasks such as data collection in support of scientific explorations. This approach combines the Internet, smartphones and social media with low-cost sensor networks to provide extensive and real-time information for community resilience in developing countries, as well as improving data provision in data-scarce regions. (UNCTAD)

Key Words: UNCTAD, Response Policy, COVID-19

PAN AFRICA

Risks of delaying Africa’s free trade deal – The AfCFTA’s momentum must be preserved to prevent nations using Covid-19 as a reason to renege.  The African Continental Free Trade Agreement (AfCFTA), launched in 2018, was supposed to be an exciting example of multilateral cooperation against a growing tide of nationalism and protectionist policies. Africa was meant to buck the trend of retreating globalism and integration by creating the largest free trade zone in the world. However, the 1 July start of free trade has been pushed out to at least 2021 as countries battle the effects of Covid-19. With the onset of the pandemic, policymakers were faced with a dilemma: push ahead or postpone? Both options have merits and pitfalls, creating a dilemma for policymakers.

Forging ahead would have been first prize for numerous reasons. First it would have offered a tailwind for African enterprises experiencing an unprecedented collapse in demand and significant cash flow crunches. Free trade – or trade with reduced government taxes – would have gradually reduced the cost of imported goods and services, allowing companies to pass savings on to consumers and provide demand relief.

Second, the symbolism of disjointed African economies coming together against extreme odds to show developed markets the importance of regional and global integration would have been powerful. Despite these aspirational benefits, however, the practical limitations of “business as usual” are obvious. Most African countries have been forced to close borders and lock down citizens to stem the spread of the virus. This poses not only unforeseen logistical hurdles, but a collapse in demand would present a less than auspicious start to the landmark deal. There would also have been capacity constraints, given the need for complete dedication of resources to crisis management. The Covid-19 fight requires all hands on deck. Much of the financial and human capital resources dedicated to finalising AfCFTA will need to be diverted to budgetary adjustments and social support programmes. Policymakers have therefore been pragmatic. An African Union (AU) summit scheduled for May to finalise trade tariffs has been postponed to 5 December, pushing out the AfCFTA commencement date. The delay is understandable but must be accompanied by a commitment to restart the process as soon as conditions permit. This is not just to protect the deal’s credibility, but to preserve the momentum and accountability of all signatories, and prevent nations from using Covid-19 as a reason to renege.

Most important, with free trade, governments will have to forego the revenue that would have been gained through the imposition of import taxes (customs and excise). Postponing the launch allows states to continue levying tariffs and retain desperately needed revenue to fund higher debt service costs, as well as healthcare and social support spend. However, this preserves a cost burden many businesses simply can’t carry in the current environment, threatening their sustainability. African business leaders are still pushing for AfCFTA to start in the second half of 2020. The postponement, while for pragmatic reasons, may have a temporary positive fiscal impact. By delaying, policymakers can retain trade revenue in the short term. But this is at the expense of immediate business stimulus (lower trade costs) that would provide higher and more sustainable revenue over the longer term. (Daily Maverick)

Key Words: AfCFTA, Regional Integration, COVID-19

Working with Africa’s apparel makers to produce personal protective equipment- The COVID-19 pandemic has created an unprecedented global demand for medical masks, gloves and gowns to protect frontline health workers. At the same time, apparel manufacturers are seeing a drop in orders for shirts, trousers, dresses, and other goods, leaving factory floors around the world, including in Africa, with idle sewing machines, putting thousands of jobs at risk. This presents an opportunity. This crisis is creating an opening for apparel manufacturers in Africa, where there is currently limited production of surgical masks, N95 masks and medical-grade gowns. By adjusting production lines and sourcing new materials, apparel makers can become mask and gown producers—which is exactly what some producers across Africa are starting to do.

But what does it take to retool? It requires new sewing patterns to make masks and gowns and materials that meet strict medical requirements. For some products, such as N95 masks, it means installing new production equipment. It also requires an understanding of certain quality standards, licenses and certification requirements. To ensure safe social distancing and hygiene practices in the workplace, it also means rethinking floor layouts to ensure workers are safe. While switching production from apparel to masks and gowns is easier said than done, over the past two months, some manufacturers are showing they can make the leap. For example, with International Finance Corporation (IFC) support, Hela Clothing  shifted its Kenyan manufacturing facility from making men’s underwear to making masks. Hela produced 10 million face masks in Kenya in April and May, 90% of which were standard three-ply surgical masks, with the remaining 10% being reusable fabric masks. The company is also working on starting production of the more sophisticated N95 respirator masks, which it will provide to clients in Kenya and other countries in Africa.

IFC is also helping Mauritius-based CIEL Limited repurpose its textile facility in Madagascar to produce medical protective wear. Shifting a factory to produce protective health equipment is, of course, fraught with challenges. These include managing export restrictions in many countries, sourcing appropriate non-woven material that protects against coronavirus but is breathable, acquiring new machinery, and learning to use that machinery in a world where technicians cannot travel. Even when these hurdles are cleared, a manufacturer’s medical and N95 masks must be tested in approved labs, though few countries have these facilities. To help clients makes a more seamless transition to health equipment production, at IFC we are introducing them to producers of nonwoven fabric, the raw material needed for medical masks, and to providers of patterns, tech packs and cut files. We are also connecting clients in non-medical industries, such as hotels and food processing that need masks, to apparel manufacturers already making the shift, such as Hela Clothing. (World Bank Blog)

Key Words: Africa, Business, COVID-19

High-Level Dialogue: Pandemic Response and Recovery and Africa's Energy Transformation – Endowed with immense renewable energy resources, Africa has already embarked on a transformative energy pathway. Accelerating progress in this regard can alleviate immediate energy challenges, while creating jobs, advancing industrial development and promoting human welfare. The International Renewable Energy Agency’s (IRENA) Global Renewables Outlook 2020 report revealed that Africa could meet about 23% of all its energy needs from renewable energy by 2030, with Sub-Saharan Africa being one of the regions with highest shares of renewable energy in total primary energy supply in 2030 (43%). Energy transformation in Africa would result in multiple socio-economic benefits.

Renewable energy deployment could result in up to additional 2 million green jobs created in sub-Saharan Africa. Renewables-based energy system would yield a positive impact in the GDP gains in Sub-Saharan Africa, which is attributable to a strong increase in net energy exports.
Against this backdrop, the African Union Commission (AUC) and IRENA are organising a virtual Ministerial Dialogue bringing together Governments, development partners and regional and multilateral institutions to consider actions needed to advance a transformation of the energy systems in Africa, given the latest developments and national experiences in the face of COVID-19.

With a view to improving the continent’s resilience and stimulating economic recovery and sustainable growth in the post-pandemic period, the discussion will offer a platform for African governments and development partners to reflect on effective means for reinforcing action towards accelerating the ongoing energy transformation in Africa, in light of Africa’s Agenda 2063 goals and alignment of the pandemic response with the sustainable development and climate objectives. (AU)

Key Words: COVID-19, AU, Regional Response

Stand in solidarity to preserve Africa’s hard-won progress, urges UN chief – The coronavirus pandemic threatens the hard-earned gains Africans have made throughout the continent, the UN chief said on Wednesday, urging the world to stand in solidarity with the people, “now, and for recovering better”. At the virtual launch of a UN briefing paper focusing on the impact of COVID-19 across Africa, Secretary-General António Guterres pointed out that citizens across the continent have done much to advance their own well-being, detailing strong economic growth, an on-going digital revolution, and a bold free-trade area agreement.  But, he added, “the pandemic threatens African progress”. The UN chief elaborated on the coronavirus’ potential to aggravate long-standing inequalities and heighten hunger, malnutrition and vulnerability to disease, saying “much hangs in the balance”.   Demand for Africa’s commodities, together with tourism and remittances, are in decline, he observed.  “The opening of the trade zone has been pushed back – and millions could be pushed into extreme poverty”. Moreover, the virus has taken more than 2,500 African lives: “Vigilance and preparedness are critical”, underscored Mr. Guterres.

‘Spectrum of urgent challenges’

Noting that while UN agencies, country teams, peacekeeping operations and humanitarian workers continue to provide support, “a spectrum of urgent challenges”, require more urgent assistance. “We are calling for international action to strengthen Africa’s health systems, maintain food supplies, avoid a financial crisis, support education, protect jobs, keep households and businesses afloat, and cushion the continent against lost income and export earnings”, the UN chief spelled out.  

Mr. Guterres echoed his call for a global response package amounting to some 10 per cent of the world’s gross domestic product and advocated for “across-the-board debt standstill”, followed by targeted debt relief.   As African countries requires quick, equal and affordable access to any eventual vaccine and treatment, Mr. Guterres recalled his appeal last month to support the Global Collaboration to Accelerate the Development, Production and Equitable Access to new COVID-19 Tools.  “It will also be essential for African countries to sustain their efforts to silence the guns and address violent extremism”, he continued, noting that upcoming elections “offer potential milestones for stability and peace”. (UNECA)

Key Words: COVID-19, UNECA, Regional Response

NORTH AFRICA

Egypt’s govt approves €116mln to back Egyptair – The Egyptian government announced it has granted a subordinated loan of EGP2 billion (€116 million) to support the national carrier Egyptair. According to the finance minister Mohamed Maait, the repayment will be made once the carrier has reached an operating rate equivalent to 80% of its operating volume in 2019. This aid is aimed at supporting the national airline's cash flow, which has seen its revenues drastically reduced since the suspension of regular traffic at all Egyptian airports on 19 March due to the Covid-19 pandemic.

According to the latest International Air Transport Association (IATA) forecast, the number of passengers in Egypt could drop by 9.5 million in 2020, which corresponds to a loss of revenue of around €1.52 million. In such a scenario, the country's GDP could decline by €2.2 billion, and 205,560 people could lose their jobs. Private sector airlines have been granted a six-month moratorium by the Egyptian government for the payment of utility bills and payments will resume in October. The measure, which also affects hotels, is part of the government's efforts to contain the impact of the ongoing coronavirus pandemic on the tourism sector. (Ecofin Agency)

Key Words: COVID-19, Egypt, Tourism Sector

EAST AFRICA

When Digital Payment Goes Viral: Lessons from COVID-19’s Impact on Mobile Money in Rwanda – Editor’s note: This article is part of NextBillion’s series “Enterprise in the Time of Coronavirus,” which explores how the business and development sectors are responding to the pandemic. For news updates and analysis, virtual events, and links to useful resources related to the COVID-19 crisis, check out our coronavirus resource page. Since the onset of the COVID-19 pandemic, many African governments have implemented policy changes and lockdowns to prevent the further spread of the virus to vulnerable populations. In countries with high levels of mobile money penetration, governments have been able to leverage digital payments to avoid cash, which can act as a carrier of the disease. Though the economic crisis is already having a devastating impact on businesses and individuals in Africa, this imperative to digitise is one of the key opportunities that are emerging from the pandemic.

The current crisis provides an opportunity for governments to advance the digitisation of their economies. Below are a few lessons on how they can achieve this, based on our Rwanda policy tracking so far. More data will be needed to see if these changes will stick.

• Make it as cheap as cash to go digital: By slashing or eliminating fees on money transfers during the lockdown period, digital payments can compete with cash. Although the sustainability of this approach remains to be seen given the sacrifice in fee revenue required from mobile money operators, it provides an on-ramp for the use of digital financial services by those who would otherwise have used cash. The current data shows cash-outs from mobile wallets have also decreased sharply since the lockdown started, and are now less than half of their January values – meaning more subscribers are using digital value. However, we will have to wait for post-COVID-19 data to determine if these behaviours are permanent.
• Track the impact: Using transaction data to track key indicators in a dashboard will give policymakers almost real-time data on whether a policy change is working as expected. The next steps will be to use transaction data to track the real economy impact of these policies, and this impact’s geographic distribution.
• Use the evidence to adjust policies: Applying data analytics to segment data on the usage of digital financial services by gender, age group, location or other demographic factors provides timely evidence on how different segments of the population are responding, and who is being excluded. Aggregated numbers cannot do this. The public sector will need to increase its investment in data science to ensure that the digital revolution is evidence-based and leveraged for the public good.  

 As this project evolves and our dashboards are finalised for policymakers to use, we hope to continue sharing the learning on this process. We hope this will encourage other governments to consider the application of advanced data analytics to financial transaction data, to track the impact of the COVID-19 crisis and the responses to policy changes among different customer populations. (next billion)

Key Words: Rwanda, COVID -19, Digital Payment

WEST AFRICA

Revenue targets set to be missed due to coronavirus– The Ghana Export Promotion Authority (GEPA) has targetted earning more than US$10billion in revenue from non-traditional exports by end of 2028, under its National Export Development Strategy programme. The country’s Non-Traditional Exports (NTEs) sector has grown from US$2million annually in the early 1980s to US$2.8billion in 2018. However, with the Africa Continental Free Trade Agreement (AfCFTA) coming, GEPA wants to take advantage and roll out a project that will ensure the country derives maximum benefits from it – hence the Export Development Strategy.
Consequently, GEPA had hopes of realising US$3.6billion from Non-Traditional Exports (NTEs) this year, but COVID-19 and its attendant restrictions have dashed hopes of meeting that target. Local producers and exporters are unable to send their products to foreign buyers because of the closure of borders, although that is not supposed to affect the movement of goods.
GEPA, when contacted on the impact of COVID-19 on NTEs, said it does expect NTE earnings to take a significant hit. However, the fact remains that cashew – a leading contributor to NTEs revenue over the last few years -has seen its value plummet by more than 50 percent this year alone. The Chairman of the Ghana Corporative Cashew Farmers and Marketing Association says the inability of buyers, particularly from Asia, to come down and purchase the nuts has seen the price of the commodity take a nose-dive. Furthermore, the once-burgeoning art and crafts sub-sector that employs about 10,000 hands according to the National Association of Handicraft Exporters, has been completely shut-down by the COVID-19 global lockdown. (Ghana Web)

Key Words: AfCFTA, Ghana, COVID -19

State of Nigeria’s economy amid COVID-19, policy responses and the way forward – Nigeria’s economy is thus expected to be hit harder than most African and other developing economies and its GDP would fall by 3.4 per cent in 2020, according to recent IMF projections, and inflation would edge up to above 13 per cent. Aside from the demand and supply shocks affecting economies across the world, as reflected in the sharp decline in the production of goods and services, the crisis will impact key aspects of the Nigerian economy. External financing flows, including Foreign Direct Investment (FDI), foreign portfolio investment and remittances will be severely reduced as investors turn to safer assets and those in the diaspora face tougher economic conditions. This can already be seen as the recent CBN OMO auction on March 19, ended with no sale as foreign investors demanded higher interests.

The impact on both domestic and external financing flows restricts the government’s fiscal ability to combat the pandemic and its effect. While other countries are borrowing heavily in order to build a more robust economic response package, Nigeria is in a more difficult situation. As noted above, a sizeable portion of revenue is already being spent on debt service and no buffer has been built. Trade is another area that is being severely curtailed. While global trade in general is affected due to logistic obstacles, Nigeria’s situation appears bleaker. Aside from the fact that the demand for oil fell sharply, its main trading partners for non-oil commodities such as India, China and Turkey have been among the most affected by the pandemic. Moreover, with the recent adjustment of the official naira-dollar rate from N305 to N360 (and further adjustments expected due to the pressure on forex earnings) and the rationing of forex to importers, imports will become more expensive; disrupting local production for which imported inputs are required.

Similar to other countries, the Nigerian government and the CBN have responded to the pandemic and its economic effects through fiscal and monetary measures. The fiscal stimulus package provided by the Federal Government is being targeted mainly at the health sector and workers. N984m has been released to Nigeria’s Center for Disease Control (NCDC) for its operations, as well as another N6.5bn for purchasing medical supplies, opening isolation centres and training medical personnel. Additionally, N500bn has been provided for establishing healthcare facilities and incentivising employers to retain staff during the economic downturn as the Emergency Economic Stimulus Bill 2020 provides 50 per cent tax refund to businesses that do not retrench staff between March 31 and December 31, 2020. On monetary policy, the CBN has reduced interest rates on all its interventions from nine to five per cent and extended debt repayment by one year. The CBN has also gone further to inject liquidity into the economy as it provided a N50bn credit facility to small- and medium-sized businesses, N2tn to the manufacturing sector, N1.5tn to the real sector and N100bn to the health sector. The government is also receiving support from multilateral financial institutions totaling almost two per cent of GDP.  (Daily Trust)

Key Words: West Africa, COVID-19, Policy Response

SOUTHERN AFRICA

Statistics South Africa on respondents losing jobs or businesses due to Coronavirus Covid-19 Lockdown –  8,1% of respondents reported that they lost their jobs or had to close their businesses and 1,4% became unemployed, according to the Wave 2 survey on the impact of the COVID-19 pandemic on employment and income in South Africa released by Statistics South Africa. According to the report, almost nine in ten (89,5%) respondents who were employed before the national lockdown remained employed during the lockdown.

The survey also found a decrease in the proportion of respondents who usually derive their income from salaries and wages, as well as from own business during the lockdown. On the other hand, the results indicated an increase in the proportion of those who derived their incomes from savings and investments (increasing from 4,8% prior to the lockdown to 6,0% during the lockdown), loans from friends, family and/or businesses (increasing from 1,7% to 3,3%), and claims from UIF (increasing from 0,3% to 2,1%). The percentage of respondents who reported no income increased from 5,2% before the lockdown to 15,4% by the sixth week of national lockdown. The survey further indicated that about a quarter of respondents (25,8%) reported that their incomes decreased during the national lockdown, while over half (56,2%) said that their income had stayed the same. Approximately one-third of respondents (33,4%) reported that COVID-19 and the national lockdown will have no impact on their ability to cover their financial obligations, while 18,7% and 18,2% of respondents indicated that it would have a major or moderate impact, respectively.

Most respondents who reported that their income reduced during the lockdown indicated that they reduced their spending during lockdown as a coping mechanism (74,9%). Other coping mechanisms that respondents used to compensate for the loss of income included accessing their savings (51,7%), relying on extended family members, friends and their communities (36,8%), and claiming from UIF (14,6%). (South African Government)

Key Words: SADC, COVID-19, Economic Growth