INTERNATIONAL

Global trade continues nosedive, UNCTAD forecasts 20% drop in 2020 – International trade in goods is expected to continue its nosedive in the coming months as economies struggle to recover from lockdown measures used to slow the COVID-19 outbreak. New UNCTAD data published on 11 June show that merchandise trade fell by 5% in the first quarter of the year and point to a 27% drop for the second quarter and a 20% annual decline for 2020. “There is still a lot of uncertainty about the possibility of any economic recovery in the second half of the year,” says Pamela Coke-Hamilton, UNCTAD’s director of international trade. “International trade is likely to remain below the levels observed in 2019,” she adds, “but how far depends on the pandemic’s evolution and the type and extent of the policies governments adopt as the try to restart their economies.” The latest UNCTAD figures were featured in the first edition of the Global Trade Update, the organization’s new quarterly report providing a comprehensive snapshot of international commerce and the main issues affecting trade flows.

An increasingly worrying scenario for developing countries - Although the coronavirus-induced trade slowdown has spared no one, forecasts show a particularly rapid deterioration for developing countries. While South-South trade saw a drop of just 2% in the first quarter of the year, UNCTAD data shows a dramatic 14% fall in April. “For developing countries, while declines in exports are likely driven by reduced demand in destination markets, declines in imports may indicate not only reduced demand but also exchange rate movements, concerns regarding debt and a shortage of foreign currency,” the report says. Preliminary data for April suggests the sharpest downturn for South Asia and the Middle East, which could register trade declines of up to 40%. Meanwhile, the East Asia and the Pacific regions appear to have fared best, with trade drops remaining in the single digits both in the first quarter of 2020 as well as in April.   China appears to have fared better than other major economies in April, registering 3% growth for exports. But the most recent data indicates that the recovery may be short-lived, as the nation’s imports and exports fell by about 8% in May.

Automotive and energy sectors collapse, agri-foods stabilize - The report shows that economic disruptions wrought by COVID-19 have affected some sectors significantly more than others. In the first quarter of 2020, textiles and apparel declined by almost 12%, while office machinery and automotive sectors fell by about 8%. In contrast, the value of international trade in the agri-food sector, which has so far been the least volatile, grew by about 2%. Preliminary data for April indicates further declines in most sectors, with a very sharp contraction in the trade of energy (-40%) and automotive (-50%) products. Significant decreases are also observed in chemicals, machineries and precision instruments, with drops above 10%. On the other hand, office machinery appears to have rebounded in April, largely because of China’s positive export performance. “In general, the variance across sectors,” the report says, “has been driven by decreases in demand and disruptions of supply capacity and global value chains due to COVID-19.”  (UNCTAD)

Key Words: Global Trade, UNCTAD, Development

Private sector leaders commit to mobilizing resources to build back better from COVID-19  – In a meeting convened by United Nations Secretary-General António Guterres on 10 June, leaders of prominent financial institutions and businesses pledged to scale-up sustainable investments globally, especially in countries most in need as a result of the COVID-19 pandemic. The Global Investors for Sustainable Development Alliance issued a statement vowing greater action to confront the global economic crisis driven by the COVID-19 pandemic and keep the Sustainable Development Goals on track.  “We, the Members of the Global Investors for Sustainable Development Alliance, met in these extraordinary circumstances to send a strong message of unity and commitment. We reinforce the UN Secretary-General’s calls for wide ranging actions that match the scale of the crisis,” the statement said. The Secretary-General told the Alliance that the pandemic’s toll of skyrocketing unemployment, and the shuttering of businesses would hurt the poorest and most vulnerable and that rebuilding to pre-crisis levels of employment and output may take years. “COVID-19 is having dramatic impacts on the way the world works – for example, by reducing energy usage and prompting the adoption of technologies that can decouple the economy from its reliance on fossil fuels,” Guterres said. “These changes can be the beginning of the process of shaping our world for the better. But the global community must go further, taking active steps to align recovery with sustainable development.”

The Alliance members agreed to accelerate efforts to align investment with sustainable development objectives and integrate the SDGs into their core business models. They also pledged to establish scalable innovative financing and investment vehicles to advance the SDGs, including through COVID-19 bonds, risk-sharing tools, joint investment and business matchmaking platforms. In addition, the group promised to promote regulations that facilitate investment in sustainable development and create more resilient economies. They also pledged to accelerate private and public sector collaboration to develop models that price-in carbon emissions and other ways to incentivize sustainable business practices. The virtual meeting, aimed at leading an urgent and coordinated response from the private sector, was chaired by UN Special Envoy for Climate Change and Finance, former Bank of England Governor Mark Carney. High profile attendees included GISD co-chairs Oliver Bäte, CEO of Allianz SE and Leila Fourie CEO of the Johannesburg Stock Exchange (JSE); as well as Brian Moynihan, Chairman & CEO of Bank of America; Marcie Frost, CEO of California Public Employees' Retirement System (CalPERS); Michael Corbat, CEO of Citigroup; and Anna Botín, Group Executive Chairman of Banco Santander. 

“No country has been spared from the economic ravages of COVID-19, with an unprecedented increase in unemployment and severe impacts falling on the poorest and most vulnerable,” Leila Fourie said today. “The pandemic has exacerbated inequalities which the SDGs are meant to address, and threatens to set back decades of progress.”  Fourie added, “We can still achieve the Goals, but it will take the mobilization of resources from both public and private sources, on a scale greater than previously foreseen.” (tralac)

Key Words: Global Trade, COVID-19, Private Sectors

Which Economic Stimulus Works? By Joseph E. Stiglitz , Hamid Rashid – During the initial shock from COVID-19, it was understandable that governments and central banks would respond with massive injections of liquidity. But now policymakers need to take a step back and consider which forms of stimulus are really needed, and which risk doing more harm than good. Governments around the world are responding forcefully to the COVID-19 crisis with a combined fiscal and monetary response that has already reached 10% of global GDP. Yet according to the latest global assessment from the United Nations Department of Economic and Social Affairs, these stimulus measures may not boost consumption and investment by as much as policymakers are hoping. The problem is that a significant portion of the money is being funneled directly into capital buffers, leading to an increase in precautionary balances. The situation is akin to the “liquidity trap” that so worried John Maynard Keynes during the Great Depression.

Today’s stimulus measures have understandably been rolled out in haste – almost in panic – to contain the economic fallout from the pandemic. And while this fire-hose approach was neither targeted nor precise, many commentators would argue that it was the only option at the time. Without a massive injection of emergency liquidity, there probably would have been widespread bankruptcies, losses of organizational capital, and an even steeper path to recovery.But it is now clear that the pandemic will last much longer than a few weeks, as was initially assumed when these emergency measures were enacted. That means these programs all need to be assessed more carefully, with an eye to the long term. During periods of deep   uncertainty, precautionary savings typically rise as households and businesses hold on to cash for fear of what lies ahead.The current crisis is no exception. Much of the money that households and businesses receive in the form of stimulus checks will probably sit idle in their bank accounts, owing to anxieties about the future and a broader reduction in spending opportunities. At the same time, banks will likely have to sit on the excess liquidity, for lack of credit-worthy borrowers willing to take out fresh loans. (Project Syndicate)

Key Words: Global Trade, COVID-19, Global Economy

Global gas demand to record largest decline in history: IEA - Global gas demand is expected to fall by four, or 150 billion cubic meters (bcm) – twice the size of the drop following the 2008 global financial crisis, according to the International Energy Agency report. The report added that the combination of COVID-19 crisis and a mild winter in the northern hemisphere have put global demand for natural gas on course for its largest annual decline in history. As of early June, all major gas markets worldwide are experiencing falls in demand or slumps in growth, according to the IEA’s latest annual market report Gas 2020. More mature markets across Europe, North America, and Asia are forecast to see the largest drops for the full year, accounting for 75 percent of total gas demand decline in 2020.

“Natural gas has so far experienced a less severe impact than oil and coal, but it is far from immune from the current crisis. The record decline this year represents a dramatic change of circumstances for an industry that had become used to strong increases in demand,” said Dr Fatih Birol, the IEA’s executive director. Global oversupply is pushing major natural gas indices to record lows, while the oil and gas industry is cutting spending and postponing investment decisions to make up for the significant shortfall in revenue. The IEA report does not assume a rapid return to the pre-crisis trajectory, although a rebound is expected in 2021.

“Global gas demand is expected to gradually recover in the next two years, but this does not mean it will quickly go back to business as usual,” Dr Birol said. “The COVID-19 crisis will have a lasting impact on future market developments, dampening growth rates and increasing uncertainties.” Also under pressure from the current oil price collapse and uncertainty surrounding short-and medium-term demand trends are the major drivers of future supply growth – US shale and large conventional projects in the Middle East and Russia. LNG remains the principal driver of international gas trade. The wave of investment in LNG projects during 2018 and 2019 will bring additional export capacity in North America, Africa and Russia. Slower growth in global gas demand is likely to result in capacity outpacing LNG imports through 2025, limiting the risk of a tight LNG market for the time being. According to the report, new production and infrastructure projects are likely to come online amid growth trends that are markedly below earlier expectations, reinforcing the prospect of overcapacity and low prices.  (Oil Review Africa)

Key Words: Global Gas Market, COVID-19, Business

Editorial: After the lockdown, a tightrope walk toward recovery - The spread of Covid-19 has shaken people’s lives around the globe in an extraordinary way, threatening health, disrupting economic activity, and hurting wellbeing and jobs. Since our last Economic Outlook update, in early March, multiple virus outbreaks evolved into a global pandemic, moving too fast across the globe for most healthcare systems to cope with effectively. To reduce the spread of the virus and buy time to strengthen healthcare systems, governments had to shut down large segments of economic activity. At the time of writing, the pandemic has started to recede in many countries, and activity has begun to pick up. The health, social and economic impact of the outbreak could have been considerably worse without the dedication of healthcare and other essential workers who continued to serve the public, putting their own health at risk in doing so.

Governments and central banks have put in place wide-ranging policies to protect people and businesses from the consequences of the sudden stop in activity. Economic activity has collapsed across the OECD during shutdowns, by as much as 20 to 30% in some countries, an extraordinary shock. Borders have been closed and trade has plummeted. Simultaneously, governments implemented quick, large and innovative support measures to cushion the blow, subsidising workers and firms. Social and financial safety nets were strengthened at record speed. As financial stress surged, central banks took forceful and timely action, deploying an array of conventional and unconventional policies above and beyond those used in the Global Financial Crisis, preventing the health and economic crisis from spilling over into a financial one.

As long as no vaccine or treatment is widely available, policymakers around the world will continue to walk on a tightrope. Physical distancing and testing, tracking, tracing and isolating (TTTI) will be the main instruments to fight the spread of the virus. TTTI is indispensable for economic and social activities to resume. But those sectors affected by border closures and those requiring close personal contact, such as tourism, travel, entertainment, restaurants and accommodation will not resume as before. TTTI may not even be enough to prevent a second outbreak of the virus.

Faced with this extraordinary uncertainty, this Economic Outlook presents two possible scenarios: one where the virus continues to recede and remains under control, and one where a second wave of rapid contagion erupts later in 2020. These scenarios are by no means exhaustive, but they help frame the field of possibilities and sharpen policies to walk such uncharted grounds. Both scenarios are sobering, as economic activity does not and cannot return to normal under these circumstances. By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments. (OECD)

Key Words: Multilateral Trading System, Export Sector, Non-tariff measures

Standards and Trade Development Facility launches 2019 Annual Report – The Standards and Trade Development Facility (STDF) launched on 11 June its 2019 Annual Report. The report, “Facing the future: shaping safe trade outcomes for developing countries”, highlights how STDF champions the United Nations Sustainable Development Goals and responds to emerging needs. Case stories and infographics in the report capture the results and lessons from STDF’s global activities, including donor-financed projects ranging from transforming agriculture to investing in technologies to facilitate business across borders. The report shares how STDF has helped to generate jobs, raise incomes and protect livelihoods, with 71 per cent of funding assisting least-developed and other low-income countries in 2019.

Since pests and diseases can all too easily spread worldwide, promoting plant and animal health and food safety across supply chains is more important than ever. The report shows how STDF is building multi-stakeholder activities, investing in safe trade systems and increasing assistance for developing countries. This will also help to support economic recovery. Download report.  (WTO)

Key Words: Global Trade, WTO, Development

PAN AFRICA

Covid-19 should not hold back Africa’s progress, Kagame says  - Efforts to curb the Covid-19 pandemic should not hold back the African continent from implementing existing and new development programmes geared towards the African Union’s Agenda 2063, President Paul Kagame has said. The President was speaking at a virtual meeting of the African Union Bureau and Chairs of Regional Economic Communities on Thursday 11th June. Kagame commended the six special envoys who are working to mobilise resources for the continent to facilitate getting through the pandemic. The provision of fiscal space for the African continent, he said not only benefits the continent but the entire world. “Providing adequate fiscal space to Africa does not only benefit Africa. It should be seen as part of the overall effort to stabilize the global economy. This is in everyone’s interest,” said Kagame, who currently chairs the East African Community.

"Moreover, the urgency of creating fiscal space must not come at the expense of existing and new development programmes which are essential to sustain progress toward Agenda 2063 including resilient health systems," Kagame said. Providing an update on the East African Community efforts amidst the pandemic, the Head of State said that the region continues to work closely to establish and implement procedures to facilitate flow of trade while protecting public health. “This includes the expanded use of digital tools and working to harmonize testing guidelines,” he said. Across the bloc, countries have put in place a taskforce with focal persons to follow up on agreed guidelines such as the testing of truck drivers at entry points as well as information sharing to improve response.Countries such as Rwanda have also since deployed robots to ease the follow up of patients, which is aimed at minimizing the exposure of healthcare workers.

He, however, pointed out that there exist few challenges such as harmonization and shared understanding of actions that need to be taken but noted that there were ongoing efforts to address them. Kagame also sent condolences to the citizens of Burundi on the sudden demise of the outgoing President Pierre Nkurunziza. Kagame also lauded progress on the Africa Medical Supplies Platform led by Zimbabwean business magnate Strive Masiyiwa which is working to help the continent procure medical supplies fast and at more affordable prices.  He reiterated his support to the cause. Later in the day, the President had a phone conversation with Canadian Prime Minister Justin Trudeau to discuss partnership with Rwanda and Africa amid the pandemic, the African Institute for Mathematical Sciences as well as the Africa Center of Excellence for Children Peace and Security. (The New Times)

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

Coronavirus pandemic boosts online trade in Africa - Alastair Tempest from the Ecommerce Forum of Africa told DW there are a number of reasons behind the success of online businesses during the pandemic.  "Because of the lockdown, people were simply not able to go out to the shops or they weren't able to buy the things they wanted in the shop," he says. "The second issue is that there's been a lot of news about how the disease is passed from person to person with things, which people suggest is cash. So using e-commerce which is cashless obviously, is a senseful way to go about it. Rwanda and Kenya have both been actively promoting cashless payments. Coronavirus has also fast-tracked ongoing developments in the field of digitalization, says economist Honest Prosper Ngowi from Tanzania's Mzumbe University. "In my opinion, Africa, especially its urban centers, is in the middle of the digital revolution," he told DW. "COVID-19 has further accelerated this." Business between retailers and consumers – the so-called 'business-to-customer' (B2C) sector – is still mainly reserved for the urban middle and upper class, Ngowi explains. However, there is also a lot of movement in the 'business-to-business' B2B industry, particularly between entrepreneurs, says Tempest. For example, digital service providers are brought directly to small farmers and market sellers – thus avoiding expensive intermediaries.

Not an easy market - Mobile internet coverage is also improving, according to Ngowi. "The digital divide between urban and rural areas is being narrowed at lightning speed in Tanzania and elsewhere in Africa." However, outside the cities, online service providers still face more practical obstacles. "We first need good roads, and traders like Jumia need a certain number of customers so that it is worthwhile to drive to the countryside," says Ngowi. Transporting goods to remote locations within a reasonable time window is one of the biggest challenges, according to Jumia Group spokesman Abdesslam Benzitouni. His company does not send its suppliers to rural areas but instead cooperates with partners, such as postal companies or service station chains. "We work with third parties who know the area well," he says. "And we have pick-up stations across the country." But one particular challenge for suppliers is to gain the trust of their customers, says Nigerian analyst, Adamu Babibkoi. "Some [customers] are quite apprehensive," he told DW. "Not everybody is confident about it because the tendency might be that you are on a wrong platform – people are not well educated about that." Whether online trade in Africa can profit from the coronavirus pandemic in the long term remains to be seen. "I think once the pandemic is gone, we'll see a flattening of the curve on e-commerce," says Tempest. "But it won't be a downward go, it will just be a flattening. (DW)

Key Words: Africa, COVID-19, Trade

Safeguarding Africa’s food systems through and beyond the crisis – There is widespread concern about the potential impact of the COVID-19 pandemic on Africa’s agricultural and food systems. This should certainly be a priority for leaders across the public, private, and development sectors: some 650–670 million people in Africa, roughly half of the population, already face food insecurity. Of those, more than 250 million people are considered to be severely food insecure.

Agriculture is also one of Africa’s most important economic sectors, making up 23 percent of the continent’s GDP. In sub-Saharan Africa, it provides work for nearly 60 percent of the economically active population. 3 Africa’s exports of food and agricultural products are worth between $35 billion and $40 billion a year, and some $8 billion a year flows through intra-regional trade in these products (Exhibit 1). In addition, Africa’s food and agricultural imports amount to between $45 billion and $50 billion a year—along with $6 billion a year in imports of agricultural inputs. In this article, we present new McKinsey analysis on the impact of the COVID-19 crisis on the continent’s agricultural and food systems, along with insights from on-the-ground discussions with agriculture value-chain players, governments, and civil-society institutions. We show how the crisis has disrupted regional and global trade and slowed demand for Africa’s agricultural export products, putting jobs and livelihoods at risk. But we also show that, to date, the impact on the food and agricultural system as a whole has largely been localized and muted. In addition, tailwinds—including good harvests in some African regions at the end of 2019—are helping to minimize the effects of the crisis.

There is no room for complacency, however. Existing vulnerabilities in Africa’s agricultural and food systems, combined with demand and supply shocks likely to flow from COVID-19, could be heightened unless mitigating actions are taken now. In the pages that follow, we evaluate the potential shocks to African demand for food products, trade in African export crops, and African agricultural and food production. We also outline practical steps that governments and companies along the value chain can consider to mitigate the impact of COVID-19 on agriculture, bolster Africa’s food security, improve the sector’s future resilience, and transform its effectiveness in the long term. (Mckinsey)

Key Words: Africa, Regional Integration, COVID-19

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

NORTH AFRICA

Morocco Calls for Expert Platform to Boost Africa’s Epidemic Resilience– Morocco’s representative at the African Union (AU) stressed during a videoconference on Thursday the importance of establishing a platform of African experts on epidemics to consolidate the continent’s response to future health challenges. The Permanent Ambassador of Morocco to the AU, Mohamed Arrouchi, raised the issue during a meeting of the Committee of Permanent Representatives of the AU. The June 11 meeting focused on the socio-economic and humanitarian impacts of COVID-19 in Africa. Arrouchi said a platform of African epidemic experts would encourage states to exchange experiences in managing health crises and strengthen continental support for governments combating diseases and epidemics, including COVID-19. The diplomat’s proposal echoes King Mohammed VI’s call in April for a continental response to the COVID-19 pandemic. 

During telephone conversations with the President of Senegal, Macky Sall, and the President of Cote d’Ivoire, Alassane Dramane Ouattara, the King proposed an “African Heads of State” initiative to establish an “operational framework” to aid countries throughout the continent in their various phases of managing the pandemic. The pan-African initiative aims to share states’ experiences and develop best practices to address the health, economic, and social impacts of the pandemic, a statement from the Moroccan royal cabinet said on April 13. Both Cote d’Ivoire and Senegal warmly received King Mohammed VI’s proposal, as did the Pan-African Parliament (PAP). In a statement on April 20, the PAP welcomed the initiative and Morocco’s “willingness to share knowledge and technology with the rest of the continent.” African countries have mobilized to overcome the “extraordinarily overwhelming” and “unprecedented health war” as a collective, the statement added.  The EU also commended the King’s vision. “This initiative seems to fit perfectly with Morocco’s return to the African family [AU] which we have observed with great interest for several years, especially in many areas essential to EU-Africa relations,” said EU spokesperson Peter Stano on April 29.   Morocco will be able to play its full part in “the collective efforts of the continent and its institutions with a view to combating the virus,” he added.

Stronger together - To highlight the importance of continental solidarity in facing shared health challenges, Arrouchi recalled during Thursday’s videoconference King Mohammed VI’s “Triple-A Initiative” (AAA) to adapt Africa’s agriculture to climate change and ensure sustainable food security. Morocco introduced the AAA initiative during the 2016 United Nations Climate Change Conference (COP22) in Marrakech. The initiative aims to reduce the vulnerability of Africa and its agriculture to climate change by promoting the implementation of specific projects to improve soil management, agricultural water control, and climate risk management.  (Morocco World News)

Key Words: North Africa, Trade, Investment

EAST AFRICA

Mastercard Foundation Commits $3.2 Million to Rescue Enterprises Through Production Repurposing to Respond to COVID-19 in Ethiopia – Mastercard Foundation has announced a partnership with a consortium of 11 small and medium enterprises (SMEs) in Ethiopia to repurpose their factories to manufacture personal protective equipment (PPE) in the fight against COVID-19. Mastercard Foundation will commit more than USD 3.2 million from the Mastercard Foundation COVID-19 Recovery and Resilience Program which was created specifically to assist institutions and communities in Africa to withstand and respond to the short-term impacts of this pandemic, while strengthening their resilience in the long-run.

The six-month Rescuing Enterprises Through Production Repurposing Program will enable the 11 SMEs to continue running their businesses and avoid having to retrench their 1,060 employees, the majority being young women. The contribution from the Mastercard Foundation will support the repurposing of factories and basic textile machines, as well as renting unused equipment to manufacture protective equipment for health care workers and masks for the general public. The SMEs within the consortium are: Enzi Shoes, FIF Trading PLC, Gaber Textiles, Habte Garment, KABANA Leather, Kootekett Leather, Mafi, Meron Addis Abeba, Sadula Business PLC, The Look Interiors, and Yefikir. "In Ethiopia, like in many developing economies, SMEs make a significant contribution to local employment and to the overall gross domestic product through their exports. An economic downturn due to COVID-19, to which SMEs are especially vulnerable, hits developing economies at their heart. With small reserves and limited working capital, many SMEs would struggle to survive a prolonged period of reduced economic activity, so the timing of this partnership is critical," said Alemayehu Konde Koira, Country Head, Ethiopia, at the Mastercard Foundation.

The program will also include the onboarding of an eCommerce marketplace to enable the SMEs to sell their products online which negates the impact of social distancing while increasing their   and resilience in the long-term. Kifiya Financial Technologies, an existing Mastercard Foundation partner, will lead the management of the fund; and provide the online platform and business support at no cost to the SMEs. "We are excited to be able to extend our partnership with the Mastercard Foundation to enable SMEs to access markets and credit, if needed, through leveraging our eCommerce, eDelivery, and digital payment technologies. It is evident from this program that the Foundation's strategy is comprehensive in its approach to match immediate challenges with long-term opportunities. The SMEs are equally excited at the prospect of being able to repurpose while transitioning to improved digital capabilities," said Munir Duri, CEO and Founder, at Kifiya Financial Technologies.

The partnership has created a platform for strong collaboration between the SMEs consortium and is providing an opportunity for the companies to remain agile during these unprecedented times and to emerge resilient. "We would have eventually had to close our doors, were it not for this program. Like most SMEs in Ethiopia, COVID-19 has severely impacted our business as our revenues are mostly generated from exporting, which was shut down in March. We are empowered and excited to be participating in the fight against the COVID-19 pandemic," said Semhal Guesh, CEO of KABANA Leather and Chair of the consortium.  (allAfrica)

Key Words: East Africa, Regional Trade Flows, Investment

Remittances to Rwanda plummet by 16% in March – There has been an unprecedented decline in the flow of remittances to Rwanda – a vibrant source of money for a section of Rwandan– just as cases of coronavirus surge worldwide and the country grapples with the pandemic. Remittance inflows to Rwanda decreased by 16 per cent in March from Rwf22.5 million, according to the latest data from the National Bank of Rwanda (BNR). In March this year, remittance inflows recorded in Rwanda stood at Rwf18.9 million compared to Rwf22.5 million recorded during the same period in 2019, a drop that could be attributed to Covid-19. “We continue to monitor the trend in April 2020 to see if the drop realized in March 2020 persists and if so, it will affirm Covid-19 effect,” an emailed response from the Central Bank to this publication read. This is because some of the largest remittance sending countries – such as the US and Germany – have locked down in an effort to reduce the impact of the virus, leaving many migrants unable to work.

In the first three months of this year (January – March), diaspora remittance inflows to Rwanda rose by 1 per cent to Rwf63.1 million from Rwf62.55 million in 2019. On average, migrants send home 15 per cent of their earnings, with one in nine people or around 800 million people on the receiving end of these flows, according to the UN Department of Economic and Social Affairs. The Covid-19 has exacerbated the inflows of remittances to low and middle income countries, generally because incomes have shrunk. But even in cases where migrants have money to send home, it has become more difficult to do so — around 80 per cent of remittances are sent physically via a Remittance Service Provider, but these money transfer networks have partially or totally shut down. On April 22 the World Bank predicted that remittances to low and middle-income countries would see the sharpest decline in recent history this year, falling by 19.7 per cent to around $445 billion, compared to $554 billion in 2019.

The fall is expected to disproportionately affect emerging economies, which are the greatest recipients of these inflows and whose citizens rely on them to varying extents for a basic income. David Malpass, the President of the World Bank Group, said in a statement released on April 22 that remittances are a vital source of income for developing countries. “The ongoing economic recession caused by Covid-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” he noted. Given that foreign direct investment flows to emerging markets are expected to fall even further than remittances this year, by around 35 per cent, the proportional reliance of some economies on remittances as sources of foreign currency may be even more prominent. (The New Tines)

Key Words: Rwanda, Trade, Business

WEST AFRICA

ECOWAS Ministers of Transport and Trade meet on Ease of Trade During the Covid-19 Period. - The ECOWAS Ministerial Coordinating Committee for Transport, Logistics, Free Movement and Trade will meet on the 12^th of June 2020 to validate the recommendations on ease of trade and movement of goods and services during the Covid-19 period. The virtual meeting will also consider useful guidelines on the coronavirus control with regards to trans-national supplies. Further, the Ministerial Committee will also appraise the broad presentation of the experts in order to give the outcome of their deliberations, the desired backing. The main documents to be adopted during the meeting are reports from the preceding experts meeting as well as the draft ECOWAS guidelines on ease of trade. The meeting will also feature a presentation on the epidemiological situation in West Africa and issues on transport, logistics and trade relating to the fight against Covid-19 by the Director General, West African Health Organization (WAHO). A communique embodying the set of recommendations on the way forward regarding the issues tackled is expected to be adopted at the end of the meeting. (ECOWAS)

Key Words: ECOWAS, Trade, COVID-19

SOUTHERN AFRICA

Eswatini Revenue Authority embarks on an electronic tariff project - Electronic tariff (e-tariff) platforms are gathering momentum across the world and there is a growing recognition that these instruments offer massive benefits both for Customs and trade. E-tariff platforms are designed to integrate all relevant information on regulatory measures applied to international trade transactions in one place for online consultation by all interested parties.    Realizing the benefits that such electronic tools can offer and in line with its modernization strategy, the Eswatini Revenue Authority (SRA) has moved to establish a comprehensive e-tariff platform, with the support of the WCO under the framework of the EU-WCO Programme for HS in Africa, funded by the European Union. The official start of the project was announced at the kick-off meeting, held on 3 June 2020 in an online format, with the participation of representatives of the SRA, the WCO and the Global Trade Solutions (GTS) – a South African company specializing in electronic tools for Customs and Member of the WCO Private Sector Consultative Group.

In his opening remarks, Mr. Dumisani Masilela, Commissioner General of the SRA welcomed the support from the WCO and expressed the commitment of his administration to set up a modern platform through which stakeholders could be informed and kept up to date on the policies and practices in place. He expressed confidence that the project will contribute to the timely and efficient implementation of the HS, avoid revenue loss, and support the ongoing efforts of Eswatini to meet the WTO Trade Facilitation Agreement commitments.

In her congratulatory remarks, the Deputy Director for Capacity Building, Mrs. Brendah Mundia conveyed the WCO’s appreciation for SRA’s keen interest to implement this important project. She reaffirmed the WCOs commitment to provide technical support and to assure the successful implementation of this important project In order to give a comprehensive and efficient user experience to trade operators in Eswatini, the e-tariff platform will seek to include an interactive section on advance rulings to allow the submission of paperless online applications for rulings. A multidisciplinary team at the SRA has been assigned to coordinate this project and will ensure close collaboration with the Eswatini National Trade Facilitation Committee. For more details, please contact capacity.building@wcoomd.org. (WCO)

Key Words: Southern Africa, WCO, Trade and Investment, COVID-19

President Cyril Ramaphosa convenes virtual meeting of African Union Bureau and Regional Economic Communities –President Cyril Ramaphosa, in his capacity as African Union Chairperson,  will chair a virtual meeting of the African Union (AU) Bureau of the Assembly of Heads of State and Government and Chairpersons of AU Regional Economic Communities (RECs) . The AU Special Envoys will also participate in the meeting to be held this afternoon, Thursday 11 June 2020.  The meeting takes place against the backdrop of the rapid spread of coronavirus (COVID-19). The pandemic continues to have major impacts on the health and lives of people and threatens to have an even longer-lasting economic and social impact on the economies of Africa. During the first few months of the outbreak, governments around the world have been focused on containing the spread of the disease, relying in many cases on stringent transmission control measures. It has become clear that the economic and social costs of the outbreak will be significant with governments increasingly turning their attention to a broader set of policy interventions that can help mitigate such costs.

Gross Domestic Product (GDP) projections have already been revised downward for most regions and countries, driven by shocks to both domestic demand and supply with sharp declines in the circulation of goods and services, as well as people and capital. The African Union has adopted a joint continental strategy for COVID19 outbreak and through the Africa Centres for Disease Control and Prevention (CDC) established a task force to coordinate the efforts of Member States and partners to ensure synergy and minimize duplication. The Union has further set up a special COVID-19 Fund, embarked on efforts to strengthen the capacity of the Africa CDC and constituted a team of Special Envoys in support of its strategy. The appointed Special Envoys are tasked to mobilize international support for Africa’s efforts to address the economic challenges the Continent will face as a result of COVID-19. They are expected to solicit rapid and concrete support as pledged by the G20, the European Union (EU) and other international financial institutions.

Today’s meeting follows previous meetings held by the AU Bureau and AU RECs will receive a briefing on the Africa COVID19 pandemic strategy and updates on the situation on the continent. It will also receive a report on the economic relief measures from the AU Envoys and a presentation, ahead of the public launch, of the Africa Medical Supplies - a pool platform for African countries for the procurement of critical medical supplies and personal protective equipment. (South African Government)

Key Words: SA, AU, COVID-19