INTERNATIONAL

COVID-19 driving smart manufacturing across production lines – COVID-19 is triggering the manufacturing sector to re-evaluate its traditional production processes, driving digital transformation and smart manufacturing across the production lines, according to Jason Chester, director of global channel programmes at InfinityQS.  Manufacturers are collectively being forced to devise and implement new and agile approaches to product monitoring and quality control. One of their biggest logistical challenges involves ensuring their production lines are running, despite the lack of available staff due to social distancing rules. This is where digital innovations in smart manufacturing can offer many benefits.  

Jason Chester, director of global channel programmes at InfinityQS, explained, “Before the lockdown started, business continuity in the event of a global pandemic was not a priority, as the risk or likelihood was not deemed high enough and the ROI was not clearly evident. Therefore, very few organisations were investing in the necessary tools and technologies to effectively respond to such a crisis situation on the scale that we are witnessing today.” “COVID-19 has forced the industry to think smarter and ultimately build more resilience into their production environments. The rise of digitalisation and steady move towards cloud-based SaaS solutions has thrown manufacturers a welcome lifeline to help them stay afloat and maintain continuity against a very challenging environment. Those who have not yet started to develop a smart production environment are finding it difficult to cope and are looking for new ways to adapt,” he explained.

Jason commented, “Organisations are trying to achieve a level of robustness and flexibility that will help them respond to any future internal or external disruptions and those who are proactively investing in smart production lines have a distinct advantage over those who are not. We understand it isn’t possible to plan for everything, but you can start prioritising the key areas of your operations to ensure you can remain as agile, responsive, and efficient as possible.” He continued, “Today’s digital cloud-based technology services and solutions offer an unprecedented level of flexibility, with factory managers able to remotely monitor and manage their production lines from any location with an internet connection. This allows resources to be deployed effectively, as staff do not have to be on the actual production floor. Instead they can use remote access cloud interface dashboards from the comfort of their homes to monitor production and pinpoint areas of improvement or quality issues.”

“Factory workers are essential to the nation’s health and prosperity. Regardless of the products you are making or the size of your company, you need to reduce the impact of potential disruptions by investing in the tools and talent to build a ‘factory for the future.’ This will enable you to keep things moving, even if the unexpected happens,” Jason concluded. (African Review)

Key Words: Global Trade, COVID-19, Business

Tourism and COVID-19: An opportunity to rebuild better – Halting of travel devastating sector that is a key driver of growth in the world’s poorest countries - Scenarios by the World Tourism Organization (UNWTO) suggests that tourism could decline by 60-80% this year, completely decimating the sector that is a key driver of growth for the world’s poorest countries. “The impacts of COVID-19 on tourism are unprecedented. With borders closed, hotels shut down and planes on the ground tourism has come to a total standstill in the last two months,” said Zoritsa Urosevic, Director of Institutional Relations and Partnerships at UNWTO. “The best-case scenario is a 58% decline in international tourist arrivals if borders start gradually opening in July. This would be the biggest dip in international tourist arrivals in history.” 100% of all world destinations have implemented travel restrictions in the wake of COVID-19, and this means 67 million fewer international tourists up to March 2020, and US$80 billion in lost exports.

Crucial sector for millions- Tourism is one of the largest and fastest-growing sectors in the world, representing nearly 10% of the world's GDP, 30% of global services exports and providing one out of every 11 jobs. Tourism is a crucial growth pillar for least developed countries (LDCs). In 2019, LDCs received 41 million international tourist arrivals – more than double the volume registered in 2010 – and earned US$26 billion from international tourism, or 11% of their total exports. “Tourism has a very broad value chain. It relies on industries like hospitality, transport and recreation but it also feeds demand in food, arts, design, cultural products and services. This is one of the reasons that it is such an important sector for development,” Urosevic said. The tourism value chain also provides important direct and indirect employment opportunities for vulnerable communities such as women and youth. Tourism was also one of the main factors enabling Cabo Verde, the Maldives and Samoa to graduate from LDC status.  (Trade4DevNews)

Key Words: Global Trade, COVID-19, Business

The Consequences of a more resource efficient and circular economy for international trade patterns: A Modeling Assessment-Environment Working Paper N°165 - By Rob Dellink- This report investigates the effects of a resource efficiency and circular economy (RE-CE) transition on international trade flows, using the OECD’s ENV-Linkages model. A global RE-CE policy package will cause secondary materials to become cheaper, while primary materials become more expensive to produce. By 2040, primary non-ferrous metals are projected to decline by 35-50%, primary iron & steel by 15% and primary non-metallic minerals by around 10%. Regional shifts in production and trade-related effects (shifts in the regional sourcing of the primary materials by the materials processing sectors) account for roughly one-third of the total reduction in materials use. The other two thirds of materials use reduction come from scale effects (reduced economic activity) and efficiency effects (reduced materials use per unit of output of the processed commodities). Countries are generally better off when they are not the only regions implementing the policy package. Indeed, by 2040, when other regions also implement the policy package, the regional GDP is projected to increase up to 0.4% above baseline levels. As imports by the home country become cheaper, domestic demand is stimulated. However, this trade effect is dominated by the domestic implementation of the policy package, which reduces domestic economic activity levels. Overall, the impact of the policy package varies between -0.1% and -0.9% from baseline levels across countries by 2040.  Some countries, not least those with a high Revealed Comparative Advantage (RCA) in materials-related commodities, have economic incentives not to implement the policy package. However, if opting out of the policy package can prevent losses in the materials exporting sectors, it also significantly lowers the global effectiveness of the policy package. Indeed, while the global GDP loss is halved, materials use reductions are cut more than tenfold for metals and threefold for non-metallic minerals.  (OECD)

 Key Words: Global Trade and Environment, Circular Economy, OECD

Space and the profusion of data – the new development frontier? – Opportunities for developing countries are not as far-fetched as some might think and need not require mobilizing resources on a massive scale for Apollo-style missions.  Space technologies can be vital in agricultural innovation, modern agriculture and precision agriculture. The use of space technologies for farming and natural resources management used to be limited largely to developed countries, due in part to the high costs involved. However, new technological developments that reduce the costs of using space-based applications and collaborations among local, national, regional and international stakeholders can potentially increase the uptake of applications relevant for addressing the Sustainable Development Goals (SDGs), particularly in developing countries. For example, open access to geospatial data, data products and services and the lower costs of geospatial information technology facilities have stimulated the adoption of space technologies worldwide, particularly in developing countries, through initiatives such as Open Data Cube.

Space technologies are also crucial to monitor disasters, set up and feed data into early warning systems, and share alerting messages through multiple ICT platforms. In May 2020, the Tropical Cyclone Amphan in the North Indian Ocean resulted in over 128 deaths and caused over $13.2 billion in damages. Satellite-based maps were used to track the cyclone and to help local authorities identify and evacuate vulnerable people as well as pinpoint areas where there were damages. But how can we ensure that the benefits of space technologies are directed towards improving the quality of life in households? Connecting the unconnected is a critical precondition for paving the way for a digital future. Satellite technologies are well-placed for the delivery of broadband services either alone or in combination with other technologies.

Expanding internet access to rural areas is challenging — populations are less dense, further from main networks, and have lower purchasing power. A new set of network technologies can often reduce infrastructure requirements and offer more cost-effective service delivery options. Bangladesh’s recently launched telecommunications satellite Bangabandhu-1 – which cost around 0.5% of the country’s annual budget – is already broadcasting TV and radio programs and will soon provide internet, telemedicine and distance learning facilities for people in remote areas. (UNCTAD)

Key Words: Global Trade, UNCTAD, Development

 PAN AFRICA

Coronavirus: The pandemic doesn’t mean AfCFTA is on lockdown – Pandemic offers chance to strengthen internal trade. For starters, higher levels of internal trade will help wean Africa off its reliance on the external markets so exposed by the pandemic. Ethiopia should be importing masks from Nigeria, not China. While many businesses are struggling with a collapse in demand, others are showing ingenuity in their ability to adapt. Companies previously deemed ‘non-essential’ are providing much needed services in high demand. Alexander Nshimiyimana, a tailor in Kigali’s main market, is using kitenge, a kaleidoscope -like local fabric to manufacture attractive and affordable face masks. It is vital cross-border trade continues to allow the free flow of essential supplies, like the masks made by Alexander, in this battle against COVID-19. Work like TradeMark East Africa’s (TMEA) Safe Trade Emergency Facility is supporting exactly this. The initiative looks to foster public-private partnerships and provide information at major border crossings, helping keep traders safe and goods flowing. Programmes such as these not only facilitate trade during the pandemic, but could have lasting benefits beyond it.

Mobile testing labs at ports and key border crossings, and the provision of personal protective equipment for the staff working them, are simple but effective ways to prevent these points from becoming virus hubs. As are the introduction of hygiene amenities, surveillance systems and quarantine facilities for truck drivers. Digital solutions also have an important role to play, driving efficiency and reducing the need for physical human contact. In Kenya, telecommunications firm Safaricom has already implemented a fee-waiver on its M-Pesa product to encourage the use of mobile money. Just as important is policy harmonisation and mutual recognition. An insistence that truck drivers are tested on both sides of the Kenya-Uganda border led to 30 kilometre tailbacks. Cooperation between lawmakers can prevent much-needed goods sitting at border crossings for weeks on end and save lives. We already know such programmes can deliver. TMEA has introduced various trade-related initiatives over the past ten years, resulting in tangible reductions in the time and cost of trading within the region. Among the successes recorded during this period are a 70% reduction in the average time to cross borders, and a 3.2 day and $62 saving in clearance times and costs along key corridors of the East African Community.

Quicker transit times - The implementation of electronic cargo tracking along the Northern Corridors traversing Kenya, Uganda, Rwanda, DRC and South Sudan has shortened transit times from 11 to four days from Mombasa to Kampala. Meanwhile, the automation and digitalisation of customs management processes in Uganda has led to a 75% reduction in transit and clearance times, as well as a financial saving of $56m annually. TMEA is building on these digitisation results to meet additional COVID-19 challenges.  The truck driver testing issue has caused massive delays at borders and TMEA aims to introduce a tracking application linked to the Regional Electronic Cargo Tracking System (RECTS) platform so that monitoring of the truck and driver will be possible.  The app will capture health and sanitation protocols that have been agreed.

Bottom line: COVID-19 has thrown up additional challenges for Africa when it comes to implementing the AfCFTA. But, through a strong focus on trade facilitation measures that promote safe trade, there is a huge opportunity to lay strong foundations for the AfCFTA in the coming weeks and months, while also supporting the continent’s response to the pandemic. (The Africa Report)

Key Words: AfCFTA, COVID-19, Regional Integration

The need for a private sector coalition on agriculture- How can Africa drive greater investment in agriculture? Dr Ibrahim Mayaki, CEO of AUDA-NEPAD examines the challenges and announces an initiative whose agenda will be driven by private sector leaders. Agriculture presents the greatest opportunity for the continent. Agriculture and agribusiness, sectors currently worth $300bn in Africa, will transform into a market worth $1tn by 2030. With 60% of the world’s available arable land and generally favourable conditions, the continent has a clear competitive advantage. The challenges and opportunities are well documented; Africa accounts for 75% of the world’s cocoa production – Côte d’Ivoire and Ghana alone account for 65% – but the continent receives only 2% of the $100bn annual revenues from global sales of chocolate and cocoa related products.

Experience and evidence from Africa show that achieving food security and realising the high potential returns offered by efficient agribusiness value chains requires visionary leadership and greater private sector participation in the agricultural space.  Africa has a clear comparative advantage in the field of agriculture. Yet it still has an annual food import bill in excess of $40bn. With the world’s youngest and fastest growing population, the agriculture sector, arguably, has the most scope for growth and development, and to create the millions of jobs needed for the youth. Creating a dynamic private sector with the clear objective of driving greater investments in agriculture is therefore critical for policy makers to fulfil their promise to their people and to meet the SDGs and the Africa 2063 agenda. Job creation and becoming part of global value chains by creating competitive advantage in key agriculture industries has become an urgent necessity.

AUDA-NEPAD has been at the forefront of the agriculture revolution. Our clear mandate, as the African Union Development Agency, is to support the continent’s economic integration by focussing on issues of trade and markets, industrialisation and infrastructure development and human and institutional development.  Among other things, this will lead to the development of effective and capable institutions in Africa.  Moreover, our works aims to promote entrepreneurship which will benefit employment creation, the development of sustainable food systems and the empowerment of rural communities. This underscores the importance of enhancing national and regional food systems and developing smart rural communities to positively impact infrastructure, nutrition, food safety and waste management.

We are now at a pivotal moment. With the launch and implementation of the landmark African Continental Free Trade Area the continent is in a unique position to capitalise on the newly integrated $3.4 trillion economic bloc. Moreover, major technology advancements are changing the way we live, work and develop. For all these reasons we believe it is paramount to catalyse greater investments into agriculture, support intra-Africa trade and use technology to transform food systems in Africa.  In order to address these issues, while mobilising public and private sector investments for large-scale regional and national projects along specific value chains,
AUDA-NEPAD is establishing the Grow  Africa Business Council (GABC) – an initiative whose agenda will be driven by private sector leaders in agriculture. (African Business)

Key Words: AfCFTA, AU- NEPAD, Regional Integration

Investing in African logistics – By Aubrey Hruby, a senior fellow at the Atlantic Council's Africa Center. Aubrey Rugo is an editor for Young Professionals in Foreign Policy's (YPFP) journal, Charged Affairs. As the Covid-19 crisis has escalated, stay-at-home orders have led to a surge in online purchases - of everything from groceries to medicines to household essentials - by consumers in the advanced economies. Africans facing similar movement restrictions will not enjoy the same convenience - or the safety it affords. Over the last decade, a growing middle class and rapid progress in mobile and internet penetration have supported the view that African countries are ripe for e-commerce success. Consumer spending across the continent is projected to reach US$2.1 trillion by 2025, by which time mobile-phone penetration in Sub-Saharan Africa is likely to stand at 50.0 per cent. Yet, so far, companies have largely failed to tap Sub-Saharan Africa's e-commerce potential, owing to logistical challenges and inefficiencies. Nigeria, the continent's largest market, ranks 110th out of 160 countries when it comes to logistical efficiency, according to the World Bank. It can take three times as long to import an auto part through Lagos, Nigeria, than through Durban, South Africa. And it can cost up to five times more to transport goods in Sub-Saharan Africa than in the United States, based on 2015 estimates. Across the continent, a lack of integration means that companies face smaller markets and considerable red tape when crossing borders.

When Alibaba was building and scaling its e-commerce ecosystem in China in 2003, it took advantage of relatively advanced urban infrastructure - the result of significant government investments in the 1990s. Thanks to that physical infrastructure, as well as existing financial infrastructure, the company was able to reach profitability with its business-to-business marketplace in 2002 - two years before the establishment of Alipay enabled it to overcome the lack of credit-card penetration and start expanding its customer-to-customer marketplace, Taobao. American and European companies had even greater advantages, including strong national postal systems and last-mile overnight delivery services like FedEx and UPS, as well as reliable and widely used credit-card networks. African e-commerce companies, by contrast, cannot always count on roads or street signs. Moreover, few Africans own bank cards (in Nigeria, the share is about 3%), and in many countries, only about 10.0 per cent of adults have mobile money accounts. Many Africans do not trust online shopping. Whereas a company like Alibaba could wait until it was already growing to improve online payments and logistics, African companies must implement their own solutions from the start, while trying to meet investors' expectations. Given these challenges, it should perhaps not be surprising that Africa's first e-commerce unicorn, Jumia, suspended operations at the end of last year in three of the 14 countries in which it previously worked, citing high fulfilment and shipping costs.

Supporting robust e-commerce growth in Africa will require infrastructure investment. According to the African Development Bank, the continent needs $130-170 billion per year in infrastructure investment - such as roads and railways - to meet baseline targets by 2025, implying a financing gap of $68-108 billion. China, with its competitive advantage in construction, can play a leading role in helping to close that gap. The expansion of both asset-heavy and asset-light local logistics companies is also essential. Before the pandemic, demand for logistics companies in Africa was already rising, and a growing amount of venture capital was being channelled toward local logistics start-ups. Even as the COVID-19 crisis results in trade disruptions, trucking remains critical for supplying food, medicine, and other essentials to individuals and health-care facilities. (The Financial Express)

Key Words: Africa, Investment, Trade Policy

Africa's economy is changing with strategic vision to accomplish development – The African Development Bank’s (AfDB) High 5 priority areas are set to support the continent's achievement of the Sustainable Development Goals (SDGs), with a major focus on 'Industrialise Africa' and 'Integrate Africa,' as  Africa must become better integrated in terms of trade and markets. At the same time, many African economies continue to function at well below their full potential. Structural transformation is needed to create more jobs, reduce poverty and accomplish sustainable development objectives. In western Mauritania, the Brakna-Ouest irrigation infrastructure improvement project, supported by the Bank with US$12mn, enabled 1500 farming and livestock-producing families to return to cultivating their fields.   AfDB made investment in energy a priority for food security. Since 2016, it has mobilised US$12bn for its “Light Up Africa” strategic priority and accessed 13.4 million people with electricity.  Morocco has made significant progress in widening access to electricity. In past twenty years, the electricity system has expanded to cover almost the entire country. The national rural electrification program, supported by the Bank with US$173.62 mn, 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.  As part of the Bank’s “Industrialise Africa” priority, 9 million people have gained access to private financing. For instance, in Nigeria where more than 70 percent of the population depends on agriculture, fluctuating harvests have significant repercussions on yields, income and food security.  Locally produced fertilizer is one solution. The Bank provided US$100mn to support construction of a modern fertilizer plant in Port Harcourt. To derive more benefit from industrialisation, Africa must become better integrated in terms of trade and markets. By this, African countries can gain access to larger markets and thereby increase incomes for millions of residents through new opportunities.

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. An important part of improving living conditions is providing better access to essential services such as health, water and sanitation. AfDB supported projects have given 43 million people access to water and sanitation since 2015. (African Review)

 Key Words: Africa, Regional Integration, Regional Trade

World Bank’s June 2020 Global Economic Prospects: Sub-Saharan Africa - Sub-Saharan Africa has been ravaged by the COVID-19 pandemic this year, likely leading to the sharpest contraction in activity on record. In addition to its heavy toll on health and safety, efforts to contain the spread of the virus—such as travel restrictions, border closures, and national lockdowns—have disrupted the functioning of domestic economies. In addition, sharply lower growth in major trading partners, as well as a collapse in commodity prices, have weighed heavily on exports. Although growth is projected to recover in 2021, the region is especially vulnerable to a larger and longer lasting downturn given the weakness of its health care systems, constrained fiscal policy space, and its limited capacity to effectively implement social distancing measures. It is also at risk of debt distress given high levels of debt and sharply higher borrowing costs.

Activity in Sub-Saharan Africa (SSA) collapsed in the first half of this year. The COVID-19 pandemic has spread rapidly across the region, taking a heavy human and economic toll with over 2,500 reported fatalities among more than 100,000 confirmed infections, while causing an unprecedented disruption to region-wide economic activity (Figure 2.6.1.A). Socialdistancing measures implemented in most countries to limit the spread of the pandemic and ease pressures on often-fragile health systems have brought activity close to a halt in many sectors (Figure 2.6.1.B). Moreover, the region has suffered as a result of the impact of the pandemic on key trading partners, the disruption to global travel and supply chains, and the collapse in global commodity prices—particularly those of oil and industrial metals (Figure 2.6.1.C). The effect of these shocks has been exacerbated by heightened investor risk-aversion, which has spurred unprecedented capital outflows from the region, dislocating currency depreciations, steep stock market falls, and sharply-higher sovereign borrowing costs (Figures 2.6.1.D and E). Countries that have been most affected are those with weak health systems, large tourism sectors, balance sheet vulnerabilities to financing shocks, or that are dependent on commodity exports. 

In Nigeria, and South Africa—the two largest economies in the region—activity has fallen precipitously during the first half of this year. The other economies in the region have also suffered markedly during the first half of 2020. In addition to domestic disruptions, several industrial commodity exporters have had to cope with weaker external demand and lower prices for oil and metals (Angola, Democratic Republic of Congo, Ghana; Chapter 4). Many agricultural commodity exporters have suffered from a collapse in export demand as well as disruptions to supply chains (Côte d’Ivoire, Ethiopia, Kenya). The precipitous fall in global travel as a result of the pandemic has had a particularly severe impact on countries with significant exposure to global travel and tourism (Cabo Verde, Ethiopia, Mauritius, Seychelles). Inflation in the region is expected to edge up this year, on average, reflecting sharp currency depreciations and disruptions to supply chains. (World Bank)

Key Words: SSA, World Bank, Economy

NORTHA AFRICA

Morocco Exports 18.5 Million Face Masks Worldwide – The Moroccan Ministry of Industry has announced that Morocco exported over 18.5 million protective face masks to 11 countries since the Ministry authorized their export on May 21. The ministry declared in a press release that 69 companies produced the protective face masks, 77% of which are made with woven fabric, while 23% are made of non-woven material. After securing the domestic market’s demand, Morocco authorized the export of face masks, starting with exports to Europe. Approximately 33.6% of the exported masks went to France, followed by Portugal with 28.5%, and Spain with 14.6%, according to the ministry. In addition to Europe, African countries also benefited from the Moroccan products. Recipient African countries include Algeria, Mauritania, and Senegal. Mexico and Saudi Arabia also imported Moroccan masks.

“The export of protective masks represents both a pledge of confidence in the certified quality of Moroccan products, and a strong development opportunity for the sector of manufacture of personal protective equipment,” the release concluded. In addition to the companies that are supplying the local market and exporting masks, Moroccan prisoners are also contributing to the supply to the Moroccan market. Detainees are making over 20,000 masks per day, according to the General Commission for Prison Administration and Reintegration (DGAPR). Moroccan women in training and integration centers in Taounate, in the northern Rif region, have also contributed to the national campaign by producing 1,500 face masks per day. They have produced more than 33,000 face masks so far. Moroccan Minister of Industry Moulay Hafid Elalamy emphasized early in May the importance of keeping a minimum of 15 million masks in the national stock. Elalamy said that Morocco will keep exporting masks as long as the national stock meets this quota.  (Morocco World News)

Key Words: North Africa, Trade, Investment

Algeria’s trade gap reached $1.5bln in Q1 2020, up 26% YoY – Over the first three months of 2020, Algeria’s trade deficit grew by 26% YoY to $1.5 billion compared with $1.19 billion in Q1 2019. Figures were provided by the Directorate of Customs (DGD).

Export revenues during the period reviewed slid by 24.85% to $7.62 billion, against $10.14 billion in Q1 2019. Hydrocarbons accounted for 92.40% of exports and generated $7.04 billion, down 25.78% compared with the $9.48 billion in Q1 2019. Non-oil revenues reached $578.7 million in Q1 2020, compared with $658.04 million in Q 2019. Import revenues over the period reached $9.12 billion, down 19.52% compared with the $11.3 billion generated in Q1 2019.

The export/import coverage ratio dropped by 6 points to 83.5% between the two periods. Algeria’s major buyers in Q1 2020 were Italy ($1.17 billion), France ($1bln), Turkey ($705.03 million), Spain ($627.8 million), and China ($417.2 million). The main suppliers over the period were China ($1.55 billion), France ($951.9 million), Italy ($741.7 million), Spain ($570.3 million), and Germany ($558.7 million). (ecofin agency)

Key Words: North Africa, Trade, Investment

EAST AFRICA

Berbera Corridor set to boost trade between Somaliland and Ethiopia – The building of the Berbera Corridor is bound to turn around trade links between Somaliland and Ethiopia. Somaliland President Muse Bihi opened the first completed 12-kilometre phase the project, the second major infrastructural project the country building after the expansion of the Port of Berbera by the Dubai Ports World (DP World). The 72 kilometre-road is an ambitious and strategic road project that will also enable Somaliland to benefit greatly from the winds of change blowing across the Horn of Africa. The project is worth US$400m and once complete with link Ethiopia’s border town of Togochale to Berbera Port in Somaliland which is strategic to landlocked Ethiopia. It is estimated Somaliland imports to Ethiopia is worth over US$800m annually and the Berbera-Togochale corridor will be instrumental in facilitating import-export trade for Ethiopia’s economy.

The road projects are being funded by the Abu Dhabi Fund for Development. Eng. Tahir Mehmood of Nael $ Bin Harmal Hydaro-export Establishment (NBHH) the firm tasked with the construction of the Berbera Corridor reiterated the firm ‘s commitment of completing the highway within the stipulated timeframe. Minister of Transport and Highway Development, Abdilahi Abokor Osman said the road has been made to last for ages.“We are here to open part of the Berbera Corridor, which is a 12 KM stretch that has been completed. I would like to point out that this road is different from the earlier road which was built to handle 6 tonnes,  the new road can now handle 40 tonnes and more, and its 11.3 meters wide and evermore durable”, the minister said. The construction of the Berbera corridor was an integral part of a contract agreement made by the Somaliland government and the United Arab Emirates and its owned port company Dubai Ports World. Ambassador Bashe Omar who initiated the agreement while representing Somaliland in UAW said his government appreciates the continuous valuable investment projects UAE has put in the Somaliland economy.

“The UAE has a long track record of engagement with Somaliland. 42 years ago the then ruler of UAE, Sheikh Zayed awarded an Italian construction company a contract to build Burao-Berbera road. “And now the current ruler of UAE, Sheikh Zayed son, Sheikh Khalifa is following his dad footsteps and continues to cement the half a century relationship between the two nations by funding the construction of the Berbera Corridor (Berbera-Tog Wajaale). May Allah Bless the UAE and its rulers,” said Bashe Omar. The DP World signed a 30-year concession agreement to administer the Berbera port which is located on the southern coast of the Gulf of Aden. The expansion will lead to the capacity of the port increase by 50%. The Berbera corridor is meant to complement the main port. (EABW)

Key Words: Ethiopia, Somalia, Regional Trade

How proposed private sector 2020/21 budget stimulus packages will lessen Covid-19 impact – The regional private sector body has proposed economic stimulus packages to mitigate Covid-19 impact, which it hopes will be considered when four EAC Partner States jointly unveil their budgets for the new fiscal year, next week. This week on Thursday, June 11, Rwanda, Kenya, Tanzania, and Uganda are expected to jointly unveil their respective national budgets for the fiscal year 2020/2021. The EAC partner states – except for Burundi and South Sudan – usually unveil their budgets on the same day in June every year after holding pre-budget consultations by their respective Ministries of Finance and Economic Planning. During pre-budget consultations, ministers agree on the tax measures each country will implement. Things are tougher this time because of challenges posed by the ongoing Covid-19 pandemic; now regarded both as a health crisis and an economic crisis.

According to Peter Mathuki, the Chief Executive Officer of the East African Business Council (EABC), this financial year, some partner states have reviewed their targeted economic growth downward by nearly 50 percent. Mathuki said: “In the region, the impact of the pandemic has been felt differently across sectors depending on the measures instituted to contain the spread of the pandemic as well as the linkage of the particular sector to the global economy.” Mathuki stressed that the expectation of the regional private sector is that EAC budgets for the next fiscal year will contain economic stimulus packages “that will mitigate the impact of the pandemic on businesses and east Africans, stimulate economic growth and recovery.”

On May 21, Rwanda's Finance and Economic Planning Minister, Uzziel Ndagijimana, presented the Budget Framework Paper to Parliament and said the Government plans to spend the biggest share of the 2020/21 budget on activities that will boost the economy as part of a broader plan to respond to the impact of Covid-19. Rwanda's 2020-2021 budget will focus on implementing the government’s economic recovery plan, Ndagijimana said. The Government of Rwanda also put in place an Economic Recovery Fund (approximately Rwf186 billion) aimed at shoring up business in the post Covid-19 period. The EABC’s budget proposals which are fiscal and monetary measures include change of customs duty, domestic taxes, and expenditure measures.

Customs duty - Since partner states have not finalized the comprehensive review of EAC Common External Tariff (CET), the regional private sector body is proposing changes of customs duty in order to promote local production and make locally manufactured products more competitive. The first change of customs duty should be through, Mathuki said, extending duty remissions to inputs that are not available in the region. He said: “Duty remission will enable manufacturers to import inputs that are not available in the region at a competitive price.” Inputs which manufacturers are seeking for duty remission include: Completely Knocked Down (CDK) kits for motor vehicles and motorcycles; sugar for industrial use; wheat grain, inputs for manufacturing of beverages and food, inputs for the manufacture of baby diapers, steel alloys for manufacturing of leaf spring, inputs used in the manufacture of energy-saving stoves and ribbons as well as some paper and paper products. Others include inputs to manufacture textile and leather products and plastics. Some are used in the manufacture of Personal Protective Equipment (PPEs) used in the fight against Covid-19. (The New Times)

Key Words: East Africa, Trade, Regional Integration, COVID-19

Monitoring COVID-19 Impacts on Firms in Ethiopia (Vol. 5) : Results from a High-Frequency Phone Survey of Firms – The COVID-19 pandemic and its negative economic effects create a need for timely data and evidence to help monitor and mitigate the social and economic impacts of the crisis. To monitor the impacts of the COVID-19 pandemic and related containment measures on formal firms in Ethiopia and inform the policy response, the World Bank, in collaboration with the Jobs Creation Commission (JCC), is implementing a high-frequency phone survey of firms (HFPS-F). The HFPS-F interviews a sample of firms in Addis Ababa every three weeks for a total of eight survey rounds, and an additional sample of firms in four other cities in Ethiopia (Adama, Bahir Dar, Hawassa, and Mekelle) for a total of seven rounds. This high-frequency follow-up allows for a better understanding of the effects of and responses to the COVID-19 pandemic on firm operations, hiring and firing, and expectations of future operations and labor demand in order to better tailor and implement interventions and policy responses and monitor their effects. The sampling strategy is explained in detail in a companion technical note.

This note summarizes the results of round 2 (R2) of the HFPS-F1, implemented between May 6 and May 27, 2020 in Addis Ababa2. While the original sample in Addis Ababa consisted of 645 firms, only 550 of those firms responded to the R2 survey. The information presented here is based on the sample of 550 firms3 that responded to both round 1 (R1) and round 2 (R2) surveys. (World Bank)

Key Words: World Bank, Ethiopia, Business

WEST AFRICA

ECOWAS Committee of Experts Meet on Ease of Trade During Covid-19 Period – The Committee of Experts set up by the Economic Community of West African States (ECOWAS) for Transport, Logistics, Free Movement and Trade in the fight against the Covid-19 pandemic, held a virtual meeting on the 8th of June 2020 to firm up guidelines for the harmonization and facilitation of Cross Border Trade and Transportation in the region. The experts are providing sectorial technical advice to the statutory decision-making bodies of ECOWAS to ensure uniform and coordinated improvement of the transport and logistics sectors while enhancing the growth of intra-regional trade, free movement and economic growth in the ECOWAS region. Addressing participants, the ECOWAS Commission’s Commissioner for Infrastructure Mr. Pathe Gueye said besides the coordination and strengthening of the fight against the Covid-19, the meeting is meant to help the region to navigate itself out of the difficult situation where it now finds itself.

Chair of the meeting and representative of Nigeria’s Minister of Aviation and Chairman of the meeting, Captain Musa Nuhu stressed the importance of finding the balance between the health well-being and economic well-being of Community citizens by ECOWAS Member States while achieving desired synergy in handling the COVID-19 pandemic. The proposed guidelines for the harmonization and facilitation of cross-border trade and transportation are in line with the West Africa Health Organization (WAHO) and other specialized international organizations such as World Health Organization (WHO), World Customs Organization (WCO), International Migration Organization, International Civil Aviation Organization (ICAO), International Maritime Organisation (IMO), African Union Commission, Africa Civil Aviation Council, and the International Air Transport Association (IATA) among others. Among others, the experts are expected to identify appropriate trade and transport humanitarian corridors and propose measures to ensure these corridors are open for medical supplies and personnel so that the fight against Covid-19 is efficient in the short medium term while ensuring continuity in community trade, transport, free movement and cross border businesses in the medium to long term. The recommendations and the proposed guidelines from the Experts will be submitted to the ECOWAS Ministers in charge of Transport and Trade who meet on 12th of June 2020 for validation. (ECOWAS)

Key Words: ECOWAS, COVID-19, Regional Trade

Nigeria Records N138.98 Billion Trade Deficit in Q1 -  Nigeria recorded a trade deficit of N138.98 billion in the first quarter of this year. The report on 'Foreign Trade in Goods Statistics' for the quarter released yesterday by the National Bureau of Statistics (NBS) showed this is the second consecutive quarter the country was recording trade deficit as its value of imports surpassed exports. "It is worth noting that the consecutive quarters of negative trade balances (and lower imports and exports) occurred against the backdrop of a global slowdown in economic activity as a result of the COVID-19 pandemic," NBS explained. Analysis of the report showed that the import component of the trade was valued at N4.22 trillion or 50.8 percent while the export component totalled N4.08 trillion indicating 49.2 percent of the total trade. The report further showed that the value of country's total trade declined by 17.94 percent to N8.31 trillion in Q1 compared to the N10.12 trillion recorded in the previous quarter, indicating 0.80 percent higher than the N8.24 trillion recorded at the first quarter of 2019.

When compared with the preceding quarter, the deficit in first quarter of 2020 represented an improvement by 76 percent. On a year-on-year basis however, the deficit was lower by 116.71 percent. The report showed that crude oil, Nigeria's dominant export, accounted for N2.95 trillion representing 72.12 percent of total exports in during the period. The value of crude oil export was 18.86 percent less than the value recorded in last quarter of 2019 and 12.80 percent lower than the value recorded in the corresponding quarter of 2019. Non crude oil exports value stood at N1.14 trillion representing 27.9 percent of total exports during the period under review. The global health crisis resulted in several countries implementing varying degrees of restrictions with respect to international trade, travel and tourism," NBS further explained. (Daily Trust)

Key Words: Nigeria, Trade and Investment, COVID-19

SOUTHERN AFRICA

Angola establishes Diamond Hub and an Angolan Diamond Bourse - Hon. Dr. Diamantino Pedro Azevedo, the Minister of Mineral Resources and Petroleum of the Republic of Angola has announced plans to further develop its industry specific market infrastructure and plans to optimise and widen its services to the global diamond trade through the establishment of an Angolan Diamond Hub and an Angolan Diamond Bourse (ADB).

Angola has in total 14 mining projects. The largest is the Catoca Mine which produces 61% in value of the total Angolan output. Six of them (Catoca, Chitotolo, Cuango, Camutwé, Somiluana and Lulo) represent 92% in value. It is estimated that only 40% of Angola’s kimberlite have so far been discovered, while experts believe that there is a high potential for finding others. Angola could be the only exception to a global decline of rough production. This opinion is shared by several financial analysts. The main ambition of the Angolan Diamond Hub will be to provide the platform that will put this enormous flow of diamonds under one roof. The Diamond Hub will include a Gemmological Academy, a Technological Research Centre and will be embedded in a Free Trade Zone. The Presidential Decree 175/18 of 27 July 2018 and a new Presidential Decree 143/20 of 26 May 2020 have outlined some important main principles which will serve as guidelines for Angola’s future in diamonds. The Presidential Decrees refer to the importance to market operations through a single channel. For all diamond trading and exports, Sodiam currently is the Angolan Government’s arm to supervise the trading activity and how the Angolan diamonds are impacting the international market. In the new framework the Angolan Diamond Bourse, therefore, comes under the supervision of Sodiam.

Industry expert Peter Meeus has been appointed as the Coordinator of the Expert Group. Meeus has extensive experience in the diamond sector and has served as MD to the HRD (today Antwerp World Diamond Centre), the umbrella organisation in the Belgian diamond sector, for 6 years from 1999 to 2006. He was the former Chairman of the Dubai Diamond Exchange from 2009 till 2018 and has been significantly instrumental in making Dubai one of the top three diamond hubs in the world. “We are pleased to have an industry leader like Peter Meeus joining us with his wealth of experience. With his expertise Angola is better positioned to further understand and serve the needs of the diamond trade and to create additional activities on a global scale,” explained Hon. Dr. Diamantino Pedro Azevedo, Minister of Mineral Resources and Petroleum of the Republic of Angola. “The wide range of services and infrastructure that the government of Angola plans to develop and offer to support the diamond trade will see completion over the next two years. Angola’s success in developing the industry has been evident over the past few years. “I look forward to working with the Angolan Government and Sodiam to explore how the Angolan Diamond Bourse can further assist diamond companies worldwide in expanding their activities to the benefit of all, whilst also looking at global investment opportunities. The industry is unique in its operations and calls for specialized focus,” commented Meeus in his appointment. (Mining Review)

Key Words: Angola, Investment Policy, Trade