INTERNATIONAL

WTO report looks at impact of COVID-19 pandemic on services trade – The note provides an overview of the impact of COVID-19 on various modes of supply and sectors that have been heavily affected by the crisis. It underscores that the crisis has led to greater reliance on online services in a number of sectors as consumers develop new habits to cope with social distancing measures imposed to combat the pandemic.bThe report points to the importance of services to broader economic activity and its role in connecting supply chains and facilitating merchandise trade. As services account for most of women’s employment globally and a great share of micro, small and medium-sized enterprises activity, disruptions in the supply of services also have an impact on social and economic inclusiveness.bThe report suggests that services trade will be key to economic recovery globally. Services such as telecommunications and computing that are vital for online supply and those such as distribution, transport and logistics that facilitate merchandise trade will help to support economic growth. The report is available here.

Key points

• Services sectors have been heavily affected by the COVID-19 pandemic. Tourism, transport and distribution services, for example, have suffered as a result of mobility restrictions and social distancing measures imposed for public health reasons. At the same time, the crisis has underscored the importance of services that enable online supply, such as telecommunications and computer services, as well as the broader infrastructural role of transport, financial, distribution and logistics services in facilitating trade and economic growth.
• Given the role of services in providing inputs for other economic activities, including connecting supply chains and facilitating trade in goods, disruptions in services supply are having a broad economic and trade impact.
• The type and extent of effects on trade in services vary by sector and mode of supply. Trade in services that involves proximity between suppliers and consumers has been severely impeded. GATS mode 2 (i.e., supply in the context of the movement of consumers abroad) and mode 4 (involving the temporary movement of natural persons) have been largely paralysed.
• The crisis is leading to a greater focus on online supply in sectors such as retail, health, education, telecommunications and audiovisual services. Suppliers are accelerating efforts to expand their online operations and consumers are adopting new habits that may contribute to a long-term shift towards online services. In the future, increased supply of services through digital networks could increase trade through mode 1 (cross-border supply).
• The increased use of online services during the COVID-19 pandemic has accentuated technology and connectivity disparities, as online classes are not feasible for students without computers, and telework is not an option for employees without broadband. Operators in developed and developing countries suspended data limits and boosted data capacity during the pandemic, and many governments issued additional wireless spectrum to further increase capacity.
• Services sectors, and the creation of conditions conducive to trade in services, will be key to the recovery from the economic slowdown.

 (WTO)

Key Words: WTO, COVID-19, Services Trade

Textile and garment supply chains in times of COVID-19: challenges for developing countries - Supply chain disruption: the reduced demand perspective - The COVID-19 outbreak led to production stops in China first, followed by closures of shops elsewhere around the world. For the moment, European and American retailers, the two destination markets for this sector, are still cancelling their orders. Cancelled orders are a cause for concern in many sourcing countries. As shippers are increasingly invoking ‘force majeure’ clauses within their contracts to halt their payments, on 8 April, the Sustainable Textile of Asian Region (STAR) Network, the body, which brings together representatives of the producing associations from Bangladesh, Cambodia, China, Myanmar, Pakistan and Vietnam, released a joint statement on the issue. It urged brands and retailers to consider the impact that their purchasing decisions during the coronavirus pandemic could have on workers and small businesses in the supply chain and, therefore, to honour their contracts with their suppliers. In their statement, the STAR Network invited global businesses to “support business partners in the supply chain as much as possible, and aim at a long-term strategy of business continuity, supply chain unity and social sustainability.”

Supply chain disruption: the reduced production perspective - the evolution of local epidemiologic situation in key sourcing countries, has impacted workforce availability and production, as well as multimodal logistics underpinning global value chains. One of the concerns in this respect is that production of fashion goods could be moved away to other sourcing countries that are resuming activities faster in the Asian region or that are closer to retailers to diversify their supply chain risk. Governments in developed countries around the world are implementing unprecedented actions to ease the effect on their economies from measures put in place to limit the spread of the pandemic. Most developing countries do not have similar financial means, health systems or social safety nets to respond to the COVID-19 pandemic crisis and its economic impacts. In this context, various assistance packages have been announced by IMF, the World Bank and others with a view to supporting economies, including emerging market economies.

Transport connectivity impact - Observable changes derived from the pandemic concerning maritime transport networks include, for example a reduction in service frequency (blank sailings and idle fleet) and changes in routing affecting particularly Asia-Northern Europe services, a key axis in the trade of fashion goods. Shipping lines are reducing the number of port calls in the maritime services they offer to adapt to declining demand and cargo imbalances (JOC, 2020). This is likely to affect the liner shipping connectivity of sourcing countries both in terms of intercontinental as well as intra-regional feeder calls and, if this situation persists, could make economic recovery even harder. The fashion industry is undoubtedly under pressure in these uncertain times. Depending on the role that countries play in the supply chain, building resilience could entail different needs and approaches. Prospects appear particularly bleak for low-cost sourcing countries that are highly dependent on textile and garments exports for revenues, concurrently faced with the challenge of limited financial means and less developed health systems and social safety nets to cope with the socio-economic effects of the pandemic. In the short-term, lockdowns around the world have thrown a spotlight on risks associated with high supply chain interconnectedness and challenges associated with global sourcing.  (UNCTAD)

Key Words: UNCTAD, Manufacturing Industry, COVID-19

WCO and UN-OHRLLS call for trade and transit facilitation during the COVID-19 pandemic – Recognizing the specific challenges faced by Landlocked Developing Countries (LLDCs), on 29 May 2020 the United Nations High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (HRLLS), Ms. Fekitamoeloa Katoa ‘Utoikamanu, and the Secretary General of the World Customs Organization (WCO), Dr. Kunio Mikuriya, issued a joint statement calling upon LLDCs and transit countries to maintain the continuity of international and regional supply chains during the COVID-19 pandemic. “We encourage LLDCs and transit countries, as well as regional organizations, to support the smooth functioning of transit, transport and trade corridors and ensure freedom of transit in line with the relevant provisions of the Revised Kyoto Convention and the guiding principles outlined in the WCO Transit Guidelines” the statement says.

The United Nations Office of the HRLLS and the WCO commit to work closely with LLDCs, transit developing countries and other relevant regional and international organizations to support efficient transit and effective trade facilitation to enhance faster and easier movement of imported medical and food supplies to fight COVID-19 as well as to enhance integration of LLDCs in global and regional trade. In addition to mitigating the effects of the COVID-19 pandemic, these efforts will support the implementation of the Vienna Programme of Action for LLDCs for the decade 2014-2024 and the 2030 Agenda for Sustainable Development. The full text of the statement is available here.  (WCO)

Key Words: WTO, Annual Report, COVID-19

PAN AFRICA

'AfCFTA Is Africa's COVID-19 Economic Palliative'—The Secretary General of the African Continental Free Trade Area (AfCFTA) Secretariat, Mr. Wamkele Mene, has described an efficient implementation of the intra-African free trade agreement as a critical tool in the hands of the continent's leaders to stimulate and re-inject dynamism into Africa's post COVID-19 economy. Mene, who participated as the guest speaker in a virtual conference that was hosted by the American Business Council (ABC), Nigeria, in Lagos, at the weekend, said the AfCFTA remains the continent's hope for economic recovery. He, stressed that no African country has the financial muscle to initiate a significant economic stimulus package the way the United States of America has done when it launched more than $1 trillion as stimulus package. He added: "I believe that even with the challenges of COVID-19, which I see as a crisis with an opportunity, most developed countries have introduced economic relief packages to re-inject dynamism and growth in their own economies. "The United States of America introduced over $1 trillion stimulus package. The European Union has introduced $500 billion and may increase it to close to a $1 trillion. "The USA also packaged $60 billion to its aviation sector in form of grants and loans. But many African countries do not have the monetary policy space, neither do they have the fiscal policy space to provide such substantial economic relieve packages, which means that for us as Africa, the implementation of the AfCFTA agreement is our own stimulus and economic relief package."

He also explained that an effective implementation of the free trade area agreement would significantly boosting intra-African trade and investments and stave off the severe contraction in the Gross Domestic Product (GDP) of between 2.5 and five per cent of the GDP that was predicted for the continent by the World Bank. Mene added: "The AfCFTA is actually the driver of economic growth in Africa and a critical tool that we have in our disposal. As I said there are very few countries in Africa that can put on the table the substantial amount in stimulus packages that we have seen elsewhere. So this AfCFTA is Africa's stimulus and economic recovery plan." He stated that the AfCFTA would liberate the continent from inhibitive trade policies of the western world that has consigned African countries as the producer and exporter of primary commodities with the imposition of 1000 per cent tariffs or more on the export of processed primary products like leather from Africa. He also said the agreement would ignite industrialisation in the continent by encouraging member states to add value to their primary products and sell them within the continent at zero tariffs. “What we require is an action plan for the implementation of an industrial development plan strategy across Africa in a disciplined manner over a number of years. This, to me, is the important factor as we implement the free trade agreement,” he said. (This Day)

Key Words: Africa, COVID-19, AfCFTA

A post-Covid-19 economic reality can kickstart Africa’s free trade area – The African Continental Free Trade Area was launched two years ago at an African Union (AU) summit in Kigali. It was scheduled to be implemented from 1 July 2020. But this has been pushed out until 2021 because of the impact of Covid-19 and the need for leaders to focus on saving lives. Studies by the International Monetary Fund (IMF), the UN Economic Commission for Africa (UNECA) and others state that the free trade area has the potential to increase growth, raise welfare and stimulate industrial development on the continent. But there are concerns. Some countries, particularly smaller and more vulnerable states, could be hurt. For example, they could suffer revenue losses and other negative effects from premature liberalization. The impact of Covid-19 will only worsen these structural weaknesses. UNECA has reported that between 300,000 and 3.3 million people could lose their lives if appropriate measures are not taken. There are several reasons for this level of high risk. These include the fact that 56% of urban dwellings are in overcrowded slums, 71% of Africa’s workforce is informally employed and cannot work from home and 40% of children on the continent are undernourished.

Africa is also more vulnerable to the impact of Covid-19 because it is highly dependent on imports for its medicinal and pharmaceutical products and on commodity exports. The latter include oil, which has suffered a severe collapse in price. Other contributing factors are high public debt due to higher interest rate payments than Organization for Economic Co-operation and Development (OECD) countries, a weak fiscal tax base, and the negative impact on Africa’s currencies due to huge stimulus measures taken by OECD countries. The Covid-19 crisis has brought these weaknesses into sharp relief. But it also provides an opportunity for African countries to address them. For example, they could accelerate intra-regional trade by focusing on the products of greatest need during the health crisis. Countries could also start building regional value chains to advance industrialization, improve infrastructure and strengthen good governance and ethical leadership. These are all vital to guiding African countries through the current crisis. These goals can be achieved if African states adopt a “developmental regionalism” approach to trade integration. This would include fair trade, building regional value chains, cross-border investment in infrastructure and strengthening democratic governance. (Quartz Africa)

Key Words: Africa, COVID-19, AfCFTA

AfCFTA: Africa’s integration programme gathers speed – The Covid-19 crisis, which has seen the closure of borders and a drop in trade across the continent, has admittedly changed the playing field – at least in the short term. A silver lining of the current crisis is that it will add urgency to accelerating efforts towards regional integration and strengthen regional and continental value chains and trade. In order to achieve a V-curve recovery the UN Economic Commission for Africa (UNECA) is pushing African countries to accelerate the process of making the AfCFTA operational by July. One area that it is working on is in terms of pharmaceuticals, where it is working with manufacturers to help them export more within the continent at zero tariffs. “The intra-African market can help to mitigate some of the negative effects of Covid-19 by limiting dependence on external partners, particularly for pharmaceutical products and basic foodstuffs”, said the Director of UNECA’s Regional Integration and Trade Division, Stephen Karingi, during a press conference in Addis Ababa in April.

In a best case scenario UNECA sees growth falling this year from its initial projection of 3.2% to 1.8%. The impact of the virus on some of Africa’s largest trading partners will also be greater than first anticipated. The European Union, China and the United States account for 52% of African exports and their economies are all predicted to see severe economic decline before picking up in 2021. The general consensus is that, hitherto, the AfCFTA can be considered a success. The speed at which it has been ratified and how discussions have progressed have surprised most critics. Nonetheless, the next stage will tell us how much progress has been made as we move from planning to implementation. The role of private sector and civil society in the implementation phase will be of paramount importance. But even in the past two years, considerable practical measures have been taken to help integrate the continent. Senegal is launching an interregional bus service with The Gambia; Rwanda has announced the elimination of visas for all African nationals. Nigeria has followed suit with its own visa-on-arrival scheme. Plans for a trans-Maghreb railway have been agreed, and plans for a single African market for air transport are advancing. Covid-19 will only accelerate the need for some of these projects, making consolidation of the aviation sector a necessary step for survival.  (African Business)

Key Words: AfCFTA, Regional Integration, Business

The “High 5s”: A strategic vision and results that are transforming Africa –  Feed Africa- Since 2015, 74 million Africans have benefited from improved agricultural technologies through the Bank’s efforts to support increased food security on the continent. In western Mauritania, for example, the Brakna-Ouest irrigation infrastructure improvement project, supported by the Bank in the amount of $12 million, enabled 1 500 farming and livestock-producing families to return to cultivating their fields.  “We come from a farming and livestock-producing family and we grew up in that environment. Our harvest was very poor. We wanted to move somewhere else,” explains Atta Abdul Seck, a project beneficiary in Louboudou in western Mauritania. “As a farmer’s son,  what I liked most when I returned was being able to continue farming. Farming is in my blood,” he says proudly. 

Light up Africa  - Without electricity, agriculture cannot effectively meet the growing challenge of food security in Africa. The Bank has made investment in energy a priority. Since 2016, it has mobilised $12 billion for its “Light Up Africa” strategic priority. Through this investment, 13.4 million people have gained access to electricity. Morocco has made significant progress in widening access to electricity. In just the past twenty years, the electricity system has expanded to cover almost the entire country. The national rural electrification program, supported by the Bank with 155 million euros, has connected nearly 12.8 million Moroccans to the national power grid. In Dar El Aïn, a village twenty kilometres from Marrakesh, the arrival of electricity has opened new doors for the women of the “Al Amal” cooperative. They use electricity to process their wheat into couscous or create other barley or wheat-based products. “The cooperative processes local crops into added-value products. Now, with electricity, the women are much more efficient, and their products are of better quality. It creates hope,” says Fatima-Zahra, a thirty-year-old member. 

Industrialise Africa - As part of the Bank’s “Industrialise Africa” priority, 9 million people have gained access to private financing. In Nigeria, for instance, where more than 70 percent of the population depends on agriculture, fluctuating harvests have significant repercussions on yields, income and food security.  One solution is fertilizer, particularly if locally produced. The Bank provided $100 million to support construction of a modern fertilizer plant in Port Harcourt. Shuaibu Yusuf, a farmer in his thirties who live near Port Harcourt, has experienced the impact of this project in his daily life. “When I used this fertilizer, I saw the difference. My harvest increased by more than 40 percent. I can feed myself, pay for my children’s education, and even their medical expenses,” he says. “I’m going to encourage my children, my neighbours and members of my community to increase their farming activities so we can all progress together,” Shuaibu continues.

Integrate Africa - To derive more benefit from industrialisation, Africa must become better integrated in terms of trade and markets. Through integration, African countries can gain access to larger markets and thereby increase incomes for millions of residents through new opportunities. Since 2015, 69 million people have benefited from the Bank’s support for new transport infrastructure that has advanced integration. Gaps in the primary transport corridors have been filled, links between countries have been strengthened, and intra-African trade has been revitalised. A good example of this is The Nairobi-Addis-Ababa corridor, which received$670 million in Bank financing and which has enhanced the potential for trade and job growth in Ethiopia and Kenya. Daniel Yatta, a forty-year-old Kenyan lorry driver, has been transporting goods between Nairobi and Addis-Ababa for 15 years, and has seen the new road’s impact on his business. “ Back in the day, it would take more than two weeks to drive between Addis and Nairobi,” he says. The new road has made his life much easier. “With the new road, the trip takes only a few days. With 30 tonnes of freight, it only takes about 24 hours to drive to Addis!” he continues.

Improve the quality of life for the people of Africa - An important part of improving living conditions is providing better access to essential services such as health, water and sanitation. Since 2015, Bank-supported projects  have given 43 million people access to water and sanitation (AfDB)

Key Words: Africa, Regional Integration, Free Market

Vaya Africa Launches Electric Vehicle, Targets African Market – Vaya Africa, a Mauritius-registered Transportation as a Service (TaaS) company, has launched an electric vehicle service in Zimbabwe as part of the company's rollout strategy across Africa. "We are excited to launch the 'VAYA Electric' vehicle today as we start our journey of deploying innovative ways of harnessing clean, renewable energy to provide safe and convenient transportation services to the public on the African continent," said Mrs Dorothy Zimuto, the CEO of Vaya Mobilty in Harare today. She said VAYA Africa planned to roll out the VAYA Electric vehicle in West and East Africa soon, saying the vehicles would include a range of multi-purpose vehicles. "Our e-vehicle fleet will include passenger vehicles, motorbikes, vans, buses and dump trucks, all utilizing our VAYA hail riding platform. We believe this dovetails well with our vision of driving inclusive technology growth across Africa," Mrs Zimuto said. The VAYA Electric will be part of VAYA Africa's VAYA Premium service, a passenger service available on the VAYA Africa application that offers a wide variety of VAYA services - including logistics services.

Describing the customer fulfilment process, Mrs Zimuto said to enjoy a ride, one simply downloads the VAYA Africa App and looks for the Mobility Option. "They select the Electric Vehicle and this prompts them to choose the pickup and destination addresses, before requesting a ride," she said. She added that the App provided for convenient payment options, including mobile money payment, payment by VISA, MasterCard or any other international debit or credit cards options. "Electric vehicles have zero emissions and our aim is to ensure that all vehicles we have on the VAYA platform in the next ten years are electric vehicles," said Mrs Zimuto, whose VAYA Africa service currently operates the largest hail riding service in Zimbabwe. She said electric vehicles will provide cost savings of up to 40 percent on the major running costs of fuel and regular maintenance, in comparison to vehicles that run on fossil fuels. "The benefits of the use of e-vehicles will be less frequent services and fewer scheduled vehicle maintenance check-ins than ordinary combustion engines. They will require minimal scheduled maintenance for their electrical systems, such as the battery and electrical motors. Other parts such as brakes also last longer because of their regenerative braking systems, where the battery is charged when breaking," Mrs Zimuto said. (263chat)

Key Words: Africa, COVID-19, Markets

NORTH AFRICA

Coronavirus: How is Egypt navigating the economic fallout?– The ravages caused by the coronavirus have equalised the playing field across the globe: not one country will come out of this untouched. But as states learn to live with this new reality, they must also create policies to minimise the economic impact this crisis will undoubtedly bring. In the case of Egypt, new policies  were being implemented back at the start on 15 March, just when the country began to feel the pinch of the virus. These included cutting the Central Bank’s interest rates by three percentage points, exempting late payments, non-performing loans and ATM withdrawals from fines and fees for six months; instructing banks to provide credit limits for companies to finance working capital and salaries; and extend the exclusion period for some basic food commodities from their 100 percent cash cover for a year. In order to better understand the policies already implemented by the state and how to improve on future ones, one needs to visit the individual sectors most affected by the economic hit of the pandemic.

Tourism – hardest hit sector - Tourism was first in line on the firing range. The first official case of COVID-19 was reported on 14 February  during a Nile cruise. The confirmed case of an American tourist aboard the cruise led to others also being confirmed as COVID-19 positive. The first death linked to the virus was a German tourist who had already travelled from Luxor to Hurghada; a popular coastal destination for Europeans. Such hot tourism destinations clearly became the starting ground for coronavirus in the country. In response, the sector itself “promptly shut down”. The difficulty with the tourism sector is its interconnectedness to other industries, such as hospitality, travel, food and tourist attractions. For Egypt, estimates of the hit its tourism sector will take– direct, indirect, or induced impact- during the first four months of shutdown until June is around $5.52bn (EGP 87bn).

Manufacturing sector - The Egyptian manufacturing sector makes up 16.2% of the country’s GDP and about 12.4% of employment. It’s not clear how much this sector will be impacted. It really depends on the immediate need of the people and their exposure to global value chains. In that case some will clearly fare better than others, for example medical supplies and food processing. Whereas, other industries considered non-essential, such as automotive, will “inevitably contract.” According to projections by the Egyptian Center for Economics Studies, the manufacturing sector could shrink by more than half for 2020.

The informal sector – difficult to assess - A sector particularly difficult to both assess—and address—and which will inevitably represent a very complicated part of the response, is the informal sector. Exceeding 50 percent of the national economy and employing two-thirds of all labour in Egypt, 44.8 percent of them work in the agricultural sector, 24.6 percent in the industrial sector—mainly small workshops and food factories—and 30.6 percent in construction, retail, and catering. (The Africa Report)

Key Words: COVID-19, Egypt, Trade

EAST AFRICA

Building resilient economies through regional integration – The Economic Commission for Africa (ECA), the African Development Bank (AfDB) and the African Union Commission (AUC) launched the second Africa Regional Integration Index (ARII 2019). The Index includes a call to action to African economies to deepen their integration. The Africa Regional Integration Index 2019, which builds on the first edition published in 2016, provides up-to-date data on the status and progress of regional integration in Africa. It also helps to assess the level of integration for every Regional Economic Community (REC) and their member countries. The report observed that although 20 countries score above average, no African country can be considered well integrated into its region. Even the most integrated country, South Africa, scores 0.625 out of 1, less than two-thirds of its potential on the scale.

The report found that much more needs to be done to integrate regional economies to make them more resilient to shocks such as the current COVID-19 pandemic. Overall, the Index shows that levels of integration on the continent are relatively low with an average score of 0.327 out of 1. “Whereas the Index edition we are releasing today has data cut off points in 2019, the present COVID-19 pandemic has reopened the question of whether enough is being done in advancing regional integration as a means to help Africa withstand systematic shocks such as the one being experienced today,” said Stephen Karingi, Regional Integration Division Director at the ECA.

“This index is both a measurement exercise and a call to action; to build resilient economies through integration,” Karingi added. “It will identify the solutions needed to truly build an integrated Africa.” Jean-Denis Gabikini, acting director of the AUC’s Economic Affairs Department, welcomed the collaboration in producing the Index. He noted that the Index covers issues of intellectual property, competition policy, investment and digital trade which are critical to the successful negotiations of Phase II and III of AfCFTA. “To achieve an “integrated, prosperous and peaceful Africa, representing a dynamic force in the concert of nations”, this ARII report will support AU Member States and RECs to address industrialisation and value addition priorities for the development of the continent,” Gabikini said. (Trade Mark East Africa)

Key Words: East Africa, Regional Integration, AfCFTA

Ethiopia Secures Over $2 Bn in Exports in 9 Months– Ethiopia's nine months exports have earned the country $2.09 billion, the Ethiopian Ministry of Trade and Industry announced. This year's revenue, compared to the nine-month period last year, has shown a ten percent increase. However, the Ministry said, the $2.09 billion falls short of the $2.68-billion target set for the period. In spite of the coronavirus pandemic, flower, vegetables and fruits, and Khat exports have surpassed the targets set for each, said Wondimu Filate, Communications Director at the Ministry of Trade and Industry. Natural gums, coffee, electronics, textiles and apparel export have hit over 75 percent of their targets, while tantalum, oilseeds, pulses, meat, species, and tea exports stood at 50 to 74 percent. The export performances of gold, leather and leather products, and live animals, however, have suffered in the market, achieving under 50 percent of the target set for them. (2Merkato.com)

Key Words: Ethiopia, Export Market, Trade

WEST AFRICA

America Business Council, Nigeria & American Chamber Ghana lead agenda for single continental market – The American Business Council, Nigeria, and the American Chamber of Commerce, Ghana are leading the course to create a single continental market in the African continent. To this end, the two bodies are having an African Continental Free Trade Agreement (AfCFTA) Implementation Post Covid-19 webinar tomorrow, 29 May, 2020. The main objective of the AfCFTA is to create a single continental market for goods and services, and enable free movement of people and investments, thus paving the way for the establishment of the Customs Union in Africa.  The webinar will help drive conversations on the role of the AfCFTA in steering or stimulating domestic production in the wake of Covid-19 and ways in which the AfCFTA can engage partners domestically and internationally to provide technical and financial support to countries in resolving critical issues.  This will also help relevant stakeholders walk away with concrete ideas of what the AfCFTA’s vision is and how to help or leverage on the opportunities. Currently the continent has a combined Gross Domestic Product of US$2.5 trillion, which can be grown by US $1 trillion within the next decade through increased production by African industries. The AfCFTA will be fundamental for the achievement of this estimated growth, the two bodies said. With the current pandemic causing economic difficulties for the African Continent, McKinsey estimates that the GDP of Africa could contract by as much as eight percentage points from the 3.9% growth forecast that was predicted for 2020. (Ghana Web)

Key Words: West Africa, AfCFTA, Market

AfDB approves 88 million euros emergency budget support for COVID-19 response – The Board of Directors of the African Development Bank on Friday approved a loan of 88 million euros to Senegal, hit hard by the novel coronavirus pandemic,  in support of  the costs of its national COVID-19 Economic and Social Resilience Program. The financing, which falls under the Bank’s COVID-19 Rapid Response Facility, will provide the nation with an emergency budget support program (PUARC) aiming to address the health, social and economic impacts of the crisis. The operation will target support measures providing relief to the most vulnerable households, while safeguarding jobs and enabling businesses to quickly resume. The operation will help strengthen the health contingency action plan through support to patient case management and care facilities with the construction of three new Epidemic Treatment Centers (ETCs), the upgrading of 7 others, as well as improving capacities of the intensive care units.PUARC will also support the distribution of food kits and the payment of the electricity and water bills for vulnerable households.

These emergency measures should enable both rural and urban households to make up for the loss of income caused by the pandemic and boost existing measures, such as cash transfers for the poorest.The operation will also support the adoption of measures to shield workers from dismissal and technical unemployment during the pandemic, ensuring that workers are paid a guaranteed minimum wage.“ Senegal is among the first countries in sub-Saharan Africa to face the pandemic. I congratulate the government for the significant efforts deployed and for thebold measures taken at a very early stage, which helped to control the spread of the virus and its social and economic impact,” Bank Director General for West Africa Region Marie-Laure Akin-Olugbade said following the approval. The COVID-19 pandemic is already having a significant impact on the Senegalese economy, through the rapid deterioration of global economic conditions and the spread of the disease. Real GDP growth projections have been revised down from 6.8% to less than 3% for 2020, due to a slowdown in the tertiary sector, especially the tourism and transport sectors. (AfDB)

Key Words: West Africa, AfDB, COVID-19

Nigeria: 14.07% ICT Contribution to GDP Excites Govt – The Federal Government has said its strategic policy directions which involves the inclusion of Digital Economy in one of its ministries' mandate resulted in increased contribution of ICT to Gross Domestic Product (GDP). Minister of Communications and Digital Economy Dr Isa Ali Pantami who disclosed this at the weekend added that the unveiling and implementation of the National Digital Economy Policy and Strategy and the National Broadband Plan have also helped to increase ICT contribution to GDP 14.07 per cent. Daily Trust reports that the National Bureau of Statistics (NBS) released 'Nigeria's Gross Domestic Product Report' for Q1 2020 on the 25th of May, 2020 where it said the ICT sector contributed 14.07% in the first quarter. The report observed that the country's GDP grew by 1.87% (year-on-year) in real terms in Q1 2020. The non-oil sector contributed 90.50% to the nation's GDP in Q1 2020 as opposed to the 9.50% contributed to total real GDP by the oil sector. The 14.07% contribution to the total real GDP in Q1 2020, higher than its contribution a year earlier(13.32%) and in the preceding quarter, in which it accounted for 13.12%. He said the COVID-19 pandemic has shown how critical the ICT sector is to the growth of Nigeria's digital economy and by extension, the general economy. He called on all sectors to take advantage of the Federal Government's new focus on the digital economy to enable and improve their processes through the use of ICTs.  (Daily Trust)

Key Words: West Africa, COVID -19, ICT

New export market for Ghana’s cassava starch industry identified – A Competitor Analysis report released by Ghana Export Promotion Authority (GEPA) points to new potential markets for Ghana’s cassava starch industry. According to the report, such new markets including Nigeria and the European markets notably Poland, Portugal, Italy present strong potentials for market diversification and penetration for Ghanaian companies and Trade Promotion Organisations. Interestingly, despite Ghana having huge existing market for cocoa derivatives including chocolate in the Nigerian market, the market share of Ghana’s cassava starch industry in Nigeria, despite its proximity, currently remains zero per cent. In 2018, exports of Ghana’s cassava starch generated close to US$1 million in revenue. However, the United States emerged as the largest importer of the product with export value of US$935,000, representing 95 per cent, whiles the remaining, though marginal, was absorbed by the European Union market.

In that same year, US total imports of cassava starch amounted to US$82.2 million with Ghana emerging as the 6th largest supplier. As Ghana is making commitment to commence the operationalization of the Africa Continental Free Trade Area (AfCFTA) which seeks to increase intra-African trade from the current 12 percent of member countries total international trade to 52 percent by 2023, Ghana Export Promotion Authority is admonishing exporters in the industry to target African countries, such as Nigeria, to increase their export sales. Again, the Authority insists that to overcome overlapping export sector priorities, it is imperative industry exporters focus more on increasing its market share in European markets notably Italy, Belgium among others while holding on to its existing market shares elsewhere. This has become necessary since reports suggest that with the implementation of AfCFTA, it is likely neighbouring African countries around Ghana will be competitors rather than export market destinations with regards to most agricultural products. Global demand for cassava starch is currently estimated to be more than US$1.8 billion. In 2018, the global cassava starch market reached a volume of 8 million tons, representing a Compound Annual Growth Rate (CAGR) of around 5 per cent. (Ghana Web)

Key Words: Ghana, COVID -19, Export Market

SOUTHERN AFRICA

Outcome of the SADC Council of Ministers Virtual Meeting held on 29^th May, 2020 – The Southern African Development Community (SADC) Council of Ministers Meeting was held virtually on 29th May, 2020 and was chaired by Hon. Prof. Palamagamba John Kabudi, Minister of Foreign Affairs and East African Cooperation of the United Republic of Tanzania and Chairperson of the SADC Council of Ministers. Extract:

1. In his opening remarks Hon. Prof. Kabudi, highlighted that the complexity and severity of the COVID-19 called for strengthened solidarity and unity to address the socio-economic impact of the pandemic in the SADC region. The Chairperson of the SADC Council of Ministers further called on the SADC region to turn the COVID-19 crisis into an opportunity by expanding the medical and pharmaceutical industry and in turn create jobs and boost the economy.
2. In her remarks, the SADC Executive Secretary H.E. Dr Tax highlighted that the COVID-19 Pandemic has brought multiple challenges and responsibilities that require extra-ordinary and innovative approaches to doing business. To this effect H.E. Dr Tax appealed to Member States to remain vigilant and learn how to live it, and as such, defeat the social and economic impact of COVID-19 as a united region.
3. To facilitate the regional COVID-19 response, Council urged SADC Member States to source Medical Equipment and Supplies from the region and to engage the private sector to re-direct some of the manufacturing towards production of Personal Protective Equipment (PPEs). To this effect, the SADC Secretariat will disseminate a list of essential medical equipment manufacturers and establish an on-line platform to facilitate easy access to information on manufacturers and suppliers of Medical Equipment needed to address the COVID-19.
4. Council noted that while the regional Guidelines on Harmonization and Facilitation of Movement of Essential Goods and Services across the SADC Region which were adopted on 6th April, 2020, have played a critical role in facilitating movement of goods, there are challenges which require urgent attention. In this regard, Council directed the expanded Technical Committee on Health to review the Guidelines by the 6th of June 2020 and report to Council.

(SADC)

Key Words: SADC, COVID -19, Business

Covid-19 threatens Southern Africa’s tobacco industry – Restrictions on movement, border closures and a complete ban on cigarette sales in South Africa during lockdown are posing problems for tobacco farmers and traders in Southern Africa, as Tendai Marima reports. The sight of gloves, hand sanitisers and masks amid piles of tobacco leaves has become the new normal on the auction floors of Malawi and Zimbabwe, where a delayed selling season is underway following ongoing disruption caused by Covid-19. The responses of Southern Africa’s authorities to curbing the spread of the disease – which include restrictions on movement, border closures and a controversial temporary ban on cigarette sales in South Africa – have raised fears that the crucial industry will suffer a severe blow in the months ahead. In Zimbabwe, farmers say that tight restrictions on movement introduced since the emergence of the pandemic make it difficult to sell their produce. Charleston Musodzi, a farmer from Karoi, a small town over 200km north of Harare, says regulations have made it hard for him to reach the markets where he sells his crop. Idiosyncratic police interpretations of national lockdown rules complicate matters further. “I can’t travel because the police say a special letter is required for this phase of the lockdown. The president said farmers are allowed to move freely but now the police on the road won’t let me through. If I can’t go to the market, how do I sell my tobacco, how do I earn anything?”

At the end of March, Zimbabwe’s President Emmer­son Mnangagwa imposed a country-wide lockdown, with a special exemption for farmers and other essential workers. At the time of writing in mid-May the tobacco season is underway after a month’s delay, but farmers are struggling to reach Harare’s auction house. Although the government promised to decongest the floor of the main auction centre by setting up exchanges elsewhere, they have yet to materialise. Many farmers have no choice but to visit the capital – a journey complicated by official and unofficial restrictions. Exports to Europe have stalled due to limited flights; ZimTrade, a local import-export association, is exploring alternative markets in the region to cover the vast shortfall. For some, the travel regulations and the slow movement of business could lead to riskier choices, including smuggling into South Africa across the Limpopo River. (African Business)

Key Words: SA, Business, Trade