IMPORTANT ANNOUNCEMENT

Second survey on COVID-19 pandemic and its economic impact on African countries - The United Nations Economic Commission for Africa (ECA) and International Economics Consulting Ltd teamed up in April 2020, in order to carry out the first survey and provide insights into the economic effects of the pandemic on economic activity and trade for businesses across Africa. The analysis and full report has been published and can be accessed here.

Based on the positive responses of the April Survey, and with a view to shedding light on the policy responses and understanding how businesses are progressing during the pandemic, the team is proposing a second round of the survey. Please also note that the scope of the questionnaire has been slightly expanded (compared to the first round) to account for issues that are gaining even more importance in the context of the pandemic and relating to supply chains, technology, competition and gender.

This survey should take 15 minutes to complete, and please rest assured all responses will remain strictly confidential. Please click on the link below to begin the survey, the deadline for completing the survey is Sunday 28 June.

https://www.surveymonkey.com/r/Covid-19-Africa-Impact

Thank you very much for giving your time to help us with our research. If you have any queries or comments about the survey or the research study, please do not hesitate to contact us by mail eca-atpc@un.org.  

INTERNATIONAL

Trade Barriers Report: EU continues to open up markets outside Europe in midst of rising protectionism  – Thanks to the European Union's successful intervention, European companies generated €8 billion in additional exports in 2019. The high number of new restrictions that hinder EU exports shows however that protectionism has become deeply ingrained in global trade. These are some of the findings of the Commission's annual Trade and Investment Barriers Report published on 18 June 2020. Commissioner for Trade Phil Hogan said: “Ensuring respect of the existing international trade rules is one of my top priorities. Our action to enforce trade rights and eliminate trade barriers brings tangible benefits for EU companies, including small ones. In 2019, our joint efforts regained for them €8 billion. Yet, we have also been facing a worrying sea change in world trade. Barriers affect EU export sectors of particular importance and obstacles spread across regions. While we focus all our efforts on the post-COVID economic recovery, this calls for new impetus to enforcement. It is essential to keep global trade flows open.”

Coordinated efforts by the Commission, Member States and EU business organisations in the framework of the Market Access Partnership, allowed European companies to regain in 2019 important export markets. This benefited among others EU farmers and food producers, for instance:

• Beef exporters from France, Ireland and The Netherlands regained access to China; producers from Ireland and Croatia recovered access to Japan and Dutch pork producers can now export also to Mexico;
• Polish producers of baby milk powder can now export again to Egypt;
• Belgian pear producers regained access to the Mexican market.

However, EU companies face also a multiplication of new unlawful barriers in sectors of strategic importance for the EU, notably in information and communication technology, electronics, auto and other high-tech industries. The total number of existing trade barriers around the word amounts to 438, out of which 43 were introduced last year by 22 different countries. The highest number of trade restrictions concern access to the Chinese and Russian markets (respectively 38 and 31 measures). China also imposed the highest number of new restrictions in 2019, followed by South Mediterranean and Middle East countries.                                          

Background - The Commission's Report on Trade and Investment Barriers has been published annually since the beginning of the 2008 economic crisis. It is part of the Commission enforcement efforts in the area of international trade rules. The report offers a detailed analysis of the types of barriers causing most problems to EU's companies and the sectors where results have been achieved. The report is based on information reported by European companies. To increase awareness of the available export support, the Commission established the Market Access Days initiative, bringing together EU companies, national trade associations and trade experts from the Commission and Member States to discuss concrete market access problems on foreign markets. In 2019, sessions were held in the Netherlands, Lithuania, Portugal, France and Latvia in which hundreds of companies participated.

Given the need to step up enforcement efforts in the area of trade, a Chief Trade Enforcement Officer will soon be nominated to coordinate and steer all EU enforcement actions. This will include the establishment of a single entry point for trade enforcement issues to respond faster and more effectively to trade restrictive practices by EU trading partners. Furthermore, on 16 June, the Commission launched of a public consultation to review EU trade policy, seeking among others proposals on how to improve EU enforcement efforts to help small businesses facing unjustified export restrictions in countries outside the EU. (tralac)

Key Words: EU, Market, COVID-19

Here’s how we are accelerating digital development for all - Information and communication technologies (ICTs) have been instrumental to keeping economies and societies going during the COVID-19 crisis. They are helping children continue to learn. They are helping adults continue to work. They are helping people to access critical medical and financial services. They are helping keep the food supply chain moving.

The key role of telecoms networks – and ITU- For 155 years, ITU has helped to steer the progress of ICTs. Through wars, famines and global pandemics of years past, our members have continued to work together to advance technology to change and improve people’s lives. But never before have telecommunication networks been so vital to our health and safety, and to keep our economy and society working, as during the COVID-19 crisis we are living through today. That’s why ITU is rapidly responding to COVID-19, from our new Global Network Resiliency (REG4COVID) Platform to the Broadband Commission Agenda for Action to the All Year, Always Online AI for Good Global Summit to the, virtual WSIS Forum 2020, WSIS TalkX series, WSIS Stocktaking Coronavirus (COVID-19) Response ICT Case Repository to the Digital Financial Services Webinar Series to our common projects with sister UN agencies, including our work with UNESCO on e-learning, with the World Health Organization (WHO) and UNICEF on health messaging, and with the International Labor Organization (ILO) on digital skills for youth, starting with young people in Africa. ICT industry players – including many of ITU’s private-sector members – have highly appreciated the support of public authorities during this crisis, but they also count on their support and expect more favorable investment environments and more flexibility to use limited resources.

A unique opportunity to accelerate digital development - The urgency of responding to COVID-19 presents us with a unique opportunity to unite to speed up the development of digital society. Having a new strategy for ICT development at the national and global level has now become more necessary than ever. ITU’s Connect 2030 Agenda is a roadmap for all our members and others to bridge this gap. It lays out a path to create better environments for investment in ICT infrastructure and facilitates the development of new technologies like 5G, and the recently deployed satellite constellations. With 10 years left to achieve the SDGs, Connect 2030 serves as an accelerator for digital inclusion. Emerging technologies such as artificial intelligence, blockchain, cloud computing and 5G have the capacity to improve the lives of billions of people around the world. But none of this is possible without the necessary infrastructure, which ITU works with its members to provide.

A digital revolution – for all - Bound by the powerful belief that technology can be a source of good in this world, ITU members have stepped up and engaged in activities that have proven essential in saving lives and keeping the economy working. ITU’s membership is growing and becoming ever more diverse, with large and small companies active in different sectors of the economy that keep our organization on the cutting edge of innovation and help strengthen the public-private partnerships critical to delivering on the promise of the digital revolution. UN Agencies have also been working together across the UN System to achieve maximum sustainable impact though the United Nations Group on the Information Society (UNGIS). We must seize this moment to accelerate the development of digital society and work together to turn today’s digital revolution into a development revolution for for all, thereby highlighting the strengthened linkages and alignment of the WSIS Action Lines with the SDGs. (UNCTAD)

Key Words: Digital Development, Global Trade, COVID-19

PAN AFRICA

The African Union Needs a COVID-19 Think-And-Do Tank - As the trajectory of the COVID-19 crisis continues to evolve, the African Union must activate Africa’s global human capital in a think-and-do tank to support the efforts of its member states. Such a mechanism, if done well, can outlast the crisis, strengthen the legitimacy of the AU, and complement future external technical assistance. The potential effect of COVID-19 on the African continent has sparked a debate. In one camp are those who fear that devastation awaits just around the corner, and view the low rates of infection as a function of inadequate testing. Some have largely written off the capacity of the continent to respond, and others, like a New York Times editorial, have suggested the creation of a “brain trust of the developed world” to create a strategy to help poor countries.

In the second camp are those who see the steps taken by African states as “so far at least, surprisingly effective” at containing the pandemic. Others on this side find other factors more persuasive: African countries have a youthful population, low mobility, and in some cases, have implemented lessons from previous pandemics. A third camp calls out the assumptions about African victimhood and dysfunction inherent in the first camp, and the begrudging acknowledgement of African innovation and agency in the second. Whichever way the debate resolves, what is true is that Africa’s lack of physical resources, such as ventilators, doesn’t equate to a lack of human capital to respond to the COVID-19 crisis. What is also true is that, in the spirit of hoping for the best while preparing for the worst, African countries have not organised a visible and coordinated multidimensional strategy to the pandemic that is commensurate with the scale of the potential threat. As the trajectory of the crisis continues to evolve and the future of how countries may need to shift responses remains unknown, the African Union (AU) must activate Africa’s global human capital in a think-and-do tank to support the efforts of its member states. Such a mechanism, if done well, can outlast the crisis, strengthen the legitimacy of the AU, and complement future external technical assistance.

First, the AU needs to provide visible political leadership internally and externally. Internally, this leadership is required to help AU member states deal with the considerable pain inflicted on African populations in the form of lockdowns and curfews, which are disrupting social and economic life. Even as some of these measures are starting to ease, many citizens of African countries are questioning whether these measures are contextually appropriate. Therefore, the AU must provide its membership with some political cover. The organisation is called to a new level of leadership; it should rewrite the rule book so that the continent doesn’t travel the short path from disrupted transport routes to high food prices and widespread political protest. An AU-convened think-tank would serve as a listening mechanism for Africans. Such an innovation would work to ensure that citizens maintain their consent and adherence to national government actions intended to curb the pandemic, and avoid an entirely new crisis – the political one. (Elephant)

Key Words: AU, Economic Growth, COVID-19

African Parliamentarians aim for increased health budgets amid COVID-19 pandemic – The Pan-African Parliament (PAP) has urged its members to ensure that African Union (AU) member states allocate adequate funding to cater for healthcare systems when budgets are submitted to Parliaments for consideration. The call follows a briefing to members of the PAP Committees on Health and Gender by the Africa CDC, which revealed that inadequate healthcare services impeded Africa’s response to the novel Coronavirus during the early days of the spread of the global health threat. The Africa CDC has described Africa’s limited health budget, weak health facilities and shortage of health workers as hinderance to the fight against pandemics in general. According to the presentation, only 50% of member states have access to modern health facilities while 10% of GDP is spent on healthcare for most African countries. Dr. Raji TAJUDEEN, Africa CDCs’ Head for Public Health and Research and Co-Chair of the Africa Task Force for Coronavirus (AFTCOR) told African Parliamentarians that the institution has been spearheading a continental coordination of COVID-19 response to fill the gaps of a weak healthcare system. As it stands, the continent has a total of 251,866 cases; 6,769 deaths; and 114,308 recoveries (45%).

The joint webinar meeting was opened by Hon. Chief Fortune CHARUMBIRA, 4th Vice President of the PAP who stressed that the continental Parliament is looking to the Committees on Health and Gender to lead its response to the current health crisis. He said “while this pandemic has prevented us from meeting physically, I am gratified that we are adopting technology to serve our people. As representatives of our citizens, we need to take charge and play a role in the process of finding solutions as we engage with both our peoples and governments.” Hon. Simplice ZINGAS, Chairperson of the Committee on Health said that experiences from the Covid-19 pandemic should serve as an ignition of a different way of addressing health issues on the Continent. He believes this is an opportunity to reinforce political commitment and accountability to frontload investments to strengthen national health systems and provide long-term domestic resources needed to achieve health goals in Africa. “Time has come to use our control over national budgets to make health a priority. We call on African Parliamentarians to ensure that budgets presented by governments give a prominent place to health systems in addition to addressing developmental issues. Parliamentarians hold the key to this process and they should only pass budgets that cater for health needs of our people,” says Hon. Zingas.

In April 2001, African Union member states met and pledged to set a target of allocating at least 15% of their annual budget to improve the health sector. 19 years later, only two African countries have reached this target. The Parliament has convened several high-level engagements to call for concrete action to effectively increase investments in health. Hon. Lucia Mendes dos PASSOS, Chairperson of the Committee on Gender, Family, Youth and People with Disability said that commitments and investments into health need to take into account the right to health in the time of Covid-19 so that social-economic issues that affect women, girls and people with disability are catered for. “Realizing the right to health must be the foundation of the COVID-19 response. Wemust not forget that we have groups with special needs; whose situation was still being addressed prior to the COVID-19 pandemic. It is our responsibility to attend to the different needs of women and girls and pay attention to the most marginalized in this time. AU member states must take immediate and progressive steps under the right to health to prevent the public health threat of COVID-19,” Hon. dos Passos remarked. (AU)

Key Words: AU, Economic Growth, COVID-19

15 Member states ready to pilot the COMESA Electronic Certificate of Origin– Fifteen COMESA Member States are ready to  start piloting the COMESA Electronic Certificate of Origin (eCO) System. The eCO is one of the latest tools developed under the COMESA Digital Free Trade Area (DFTA) initiative. Burundi, DR Congo, Egypt, Eswatini, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Tunisia, Zambia and Zimbabwe have indicated their readiness to pilot the COMESA eCO system. The need to start implementing the eCo system has gained urgency given the challenges that movement of goods across borders is facing as a result of restrictive measures put in place in response to the Coronavirus pandemic. The eCO will replace the manual certificates and help to circumvent the onerous manual process.

Certificates of Origin are issued to exporters within the COMESA Free Trade Area (FTA) to confer preferential treatment to goods originating from an FTA  member State. The uptake of the electronic certificate has not gained traction among Member States in the past for lack of the necessary regulations under the COMESA Rules of Origin (RoO). The decision to adopt the eCo  was made by the Council of Ministers in 2014 to replace the manual certificate. The objective was to facilitate intra-regional trade through reduction in the costs and time required in registration, application and submission of certificates and the post-verification of originating goods. In November last year, the 40th Meeting of the Council of Ministers adopted the draft regulations to implement the COMESA eCO system.

Subsequently, a Technical Working Group (TWG) on Rules of Origin was tasked to review the Rules to facilitate implementation of the COMESA eCO and other trade facilitation instruments. On Wednesday, last week, during the 14th meeting of the TWG, COMESA Secretariat undertook to collaborate with Member States that are ready to pilot the system to develop national piloting plans to ensure that electronic certificates are implemented sooner rather than later. “The emergence of the COVID-19 pandemic calls for speedy implementation of the COMESA eCo by all Member States,” said the COMESA Director of Trade and Customs, Dr Christopher Onyango. “This together with the improvement of customs cooperation and trade facilitation, will no doubt enhance intra-regional trade and attract more investments into the region.”

Critical Challenges - He noted that the region was currently facing two critical challenges: firstly, the COVID-19 pandemic, which has changed ways of conducting businesses across the world threatening to reverse the gains already made in fostering a liberalized trade regime. Secondly, the value of intra-COMESA trade has remained stagnant and does not mirror the instruments put in place, especially under the FTA trade regime adopted way back in 2000. “It is rather disheartening that despite the preferences offered under the FTA, intra-COMESA is at 8% of total trade, compared to Africa’s 15%, America’s 47%, Asia’s 61% and Europe’s 67%,” Dr Onyango noted. “We hope the recently adopted COMESA response guidelines will help restore order and safeguard existing trading arrangements.” (tralac)

Key Words: Africa, COVID-19, COMESA

CCA Leaders Forum - Resilient U.S.-Africa Business Engagement to Drive Post COVID19 Recovery in Africa – Attendance is Free but Registration is Required | June 23 – 26, 2020. To register and learn more, visit the Forum website:  https://cca.eventbank.com/event/corporate-council-on-africa-leaders-forum-23492/ Register now to attend the Corporate Council on Africa Leaders Forum, a high-level virtual webinar series which will bring together Heads of State, senior USG and African government officials, CEOs and private sector executives, and leaders from multilateral institutions to discuss U.S.-Africa business engagement that will shape and drive post-COVID-19 recovery in Africa. The discussions at the Forum will address: The Global Financial Response to COVID-19 in Africa; Economic and Health Innovations in Response to COVID-19 in Africa; Drivers of post-COVID 19 Growth in Africa; and Sustaining Regional and Bilateral Trade in Africa post-COVID-19

African Presidents confirmed to speak at the Forum include:

• H.E. Nana Akufo-Addo President of Ghana,  
• H.E. Uhuru Kenyatta President of Kenya
• H.E. Filipe Nyusi, President of Mozambique.  

Notable CEOs and private sector leaders, senior government and multilateral officials slated to speak including:

• Dr. Vera Songwe, Under-Secretary-General, United Nations and Executive Secretary, United Nations Economic Commission for Africa
• Hon. Dr. Zainab Shamsuna Ahmed, Hon. Minister of Finance, Budget and National Planning, Nigeria  
• Farid Fezoua, President and CEO, GE Africa
• Gregory Rockson, Co-Founder and CEO, Mpharma
• Tewolde GebreMariam, Group CEO, Ethiopian Airlines
• Wamkele Mene, Secretary General, AfCFTA
• Admassu Tadesse, President and Chief Executive of the Eastern and Southern African Trade and Development Bank (TDB)
• Dr. Albert Zeufack, Chief Economist, Africa, The World Bank Group  
• Aida Diarra, SVP and Head of Sub-Saharan Africa, Visa
• Acha Leke, Senior Partner, McKinsey & Company
• Mr. Karim Senhadji, CEO, OCP Africa  
• Mohamad Darwish, Chief Executive Officer and co-founder of IHS Nigeria at IHS Towers and CEO, IHS Nigeria
• Hon. Betty Maina, Cabinet Secretary, Ministry of Industrialization, Trade and Enterprise Development, Kenya  
• Dr. Donald Kaberuka, Chairman and Managing Partner, SouthBridge, Emeritus President, AfDB
• Akin Dawodu, Managing Director, Head for Sub Saharan Africa, Citi  
• Paul Sullivan, President, International Business, Acrow Bridge  
• Rosa Whitaker, President and CEO, Whitaker Group  
• and many more!

 (allAfrica)

Key Words: Africa, COVID-19, Business

NORTH AFRICA

Impact of COVID19 can open up new avenues for structural transformation in North Africa- Can the post COVID19 economic context provide Morocco, and more generally North Africa, with an opportunity to reorient and accelerate their structural transformation? Three experts gathered on June 10, 2020 for a joint webinar by the ECA Office in North Africa and the Moroccan think tank Policy Center for the New South (PCNS) under the theme “Structural transformation of the Moroccan economy: before and post-COVID19” examined the economic impact of the pandemic on Morocco’s structural transformation process, and new opportunities generated by the reorganization of the global value chains in the wake of the pandemic. According to Zoubir Benhamouche, an economist at the ECA office in North Africa, Morocco and the rest of North Africa were experiencing, prior to the COVID19 pandemic, a slowdown in productivity growth. Moreover North Africa experienced weak structural transformation.

Structural transformation is defined as the process of reallocating production factors such as labour or capital between sectors. Structural transformation is positive when factors of production reallocate from less to more productive sectors/activities. Over the last few months, COVID19 has introduced new constraints, which call into question well established global value chains, leading many countries to redefine their economic strategies, and impacting key trading partners for Morocco, such as Europe. "We expect economic sovereignty to become a key issue, which will determine development and growth policies, as well as medium and long-term economic recovery plans," said Larbi Jaïdi, a Senior Fellow at PCNS. This will trigger significant changes without necessarily going so far as to bring about a complete paradigm shift: "Today, the fragmentation model is such that countries are unable to revert to older models, which would have allowed them to take ownership of all segments of industrial activity," said Larbi Jaïdi, adding that nowadays, States are not the only actors influencing globalization dynamics as multinationals, and behind them, companies of various sizes, also play a role.

"I don't think COVID19 will cause the kind of shock that would trigger a complete overhaul of economic systems or a structural change in the basic principles of trade and investment. International Investors will continue to seek the most profitable investment opportunities they can find, companies will seek to sell their products in promising markets providing them with better returns, and consumers are not willing to pay more or see their wellbeing deteriorate due to possible readjustments, ” said Abdelaziz Aïtali, Senior Economist at PCNS. Despite this, the revision of global value chains in the wake of COVID19 and trade tensions between major world powers such as the US and China should lead to some forms of localization or relocalization depending on sectors, the degree of strategic interest, logistical aspects, etc, he added. To seize the opportunities thus generated, countries like Morocco and its neighbors need to reduce obstacles to the efficient distribution of resources within their economies, while leaving their governments enough margin of maneuver to create incentives for targeted sectors, as part of their strategies to facilitate the emergence of new national industries and champions. (UNECA)

Key Words: North Africa, Trade Policy, COVID-19

EAST AFRICA

Uhuru defends trade deal with US, insists will not affect Africa pact– President Uhuru Kenyatta has reiterated that bilateral trade deal between Kenya and the US will not undermine the African Continental Free Trade Agreement (AfCFTA). The President says a new trade deal between Kenya and the US will be a win for Africa. It is the second time the President is giving his assurance after similar sentiments during his February visit to the US, where his meeting with US President Donald Trump opened talks for a possible a trade pact between Kenya and the US. President Uhuru spoke on Thursday at State House, Nairobi, during a webinar hosted by the Atlantic Council under the theme," strengthening US-Africa ties through trade". He said instead a new deal will assist the continent by creating a reference upon which other African nations will negotiate bilateral arrangements within the AfCFTA framework going forward. "Kenya will be the first under the new AfCTA so we are going to be trailblazers in this and we hope that others will also follow through," President Uhuru said said.

The Atlantic Council is an American think tank whose mission is to promote constructive leadership and engagement in international affairs. It regularly hosts world leaders to discuss subjects of public interest. The President said an FTA(free trade agreement) between the US and Kenya would reposition Kenya as a gateway of American investments into Africa. "The essence of an FTA is investment. Ultimately, I believe, Americans themselves will be able to say, why can't we just invest in Kenya and not only take advantage of Kenya but the region," the Head of State said. In the negotiating the FTA, the President said Kenya is going for a win-win arrangement that will benefit both Kenya and the US. "We believe that all trade negotiations are based on a win-win. We believe that's the intention of the United States just as much as it is our intention," he said.

Commenting on Africa's response to the Covid-19 health crisis and the recent China-Africa Summit, the President said Africa's foremost concern is to protect its population from the virus. "Coronavirus is mainly a health issue and our key focus is ensuring that we keep our people safe," the President said. On the negative economic impact of Covid-19, the President Kenyatta said Kenya and several other African countries, working under the auspices of the African Union, had put together stimulus packages to support sectors that are badly affected such as tourism and aviation to cope. He however reiterated the African Union's call for more international support to the continent especially in freeing up of finances the continent needs to respond to the pandemic. "Without a doubt, Kenya like many African and global countries, we are also under fiscal pressure. We need fiscal space so that we are able to re-engage," President Uhuru said. On Kenya's seat on the UN Security Council, President Uhuru  said the country seeks to contribute more strategically to global peace and security by assisting her neighbours achieve stability. (The Star)

Key Words: Trade Negotiation, AfCFTA, US-Africa Relations

Rwanda: Cross-Border Trade Unscathed Despite COVID-19 - Minister Gatete - The Minister of Infrastructure Claver Gatete has said that cross border trade is progressing well, despite the measures in place to contain the Covid-19 pandemic. "Trade is going well. In 25 hours, we receive between 400 and 500 cross border trucks at Rusumo border. Sometimes they are more. At Kagitumba, it is between 45 and 60 while at Cyanika, they are between 9 and 15." Rusumo is Rwanda's gateway to Tanzania on the Central Corridor while Kagitumba and Cyanika link Rwanda to Uganda and serves as the gateway to the port of Mombasa in Kenya, through the Northern Corridor. Gatete disclosed this during a news conference held in Kigali on Friday, to give an update on cross border movement of goods. Currently, the country's borders are closed and only freight transport trucks and returning Rwandans and citizens are allowed in to the country.

In May, over 1,000 trucks destined for Rwanda were stuck at the Tanzanian border town of Benako, after some Tanzanian truck drivers protested the requirements by Rwanda to adopt a relay system handing over their trucks to Rwandan drivers. This was solved, after it was agreed that goods destined for Rwanda would be offloaded at border points with the exception of perishable goods and petroleum products which are escorted at no cost to their final destinations, among other resolutions. Gatete said that all this was put in place, with a primary objective of minimizing the spread of coronavirus. The restoration of normalcy at the borders was confirmed by the Chairman of the Private Sector Federation (PSF), Robert Bapfakurera that although not at full capacity, business generally has been going well. "Where we are from to where we are now, things are fine. "We are going to work with hotels, some of which are still closed, because their business mainly depend on tourism. Some tourists come from other countries, but now all borders are closed," he said. Bapfakurera added that the government is doing what is possible to reopen borders, but with some guidelines. (The New Times)

Key Words: East Africa, Cross-Border Trade, COVID-19

The United States-Kenya Free Trade Area (FTA): insights into the bilateral trade relationship and early progress on setting terms for an FTA – On 6 February 2020, US President Donald Trump announced the United States’ intention to initiate negotiations with Kenya on a bilateral Free Trade Area (FTA). This followed a meeting between President Trump and Kenyan President Uhuru Kenyatta at the White House during a state visit by Kenyatta to the US.

An FTA between the US and any country would be noteworthy, but even more so when it potentially involves the first country in Sub-Saharan Africa (SSA) and only the second on the African continent after Morocco. The US-Morocco agreement entered into force in 2006 and is considered a comprehensive agreement that has seen bilateral trade between the countries grow significantly (with the US enjoying a substantial trade in goods surplus with Morocco).

A Kenya-US agreement would be remarkable for many reasons, including some issues and challenges that are potentially complex in the light of other existing arrangements and dynamics. In terms of US-African trade, Kenya was ‘only’ the seventh largest source of (imported) goods by the US from Sub-Saharan Africa during 2019, by comparison accounting for less than 10% of South Africa’s exports to the US, with South Africa being the largest SSA exporter to the US.

This working paper looks at the planned Kenya-US FTA mainly from the perspective of the current trade relationship, reviewing developments and growth in Kenya’s US-bound exports since 2000 when the African Growth and Opportunity Act (AGOA) began to offer expanded preferences to Kenyan exporters, and also the extent to which Kenya utilises and perhaps relies on such preferences. It also analyses patterns in US exports to Kenya, which take place on standard Most Favoured Nation (MFN) terms, and for some context provides a snapshot of Kenya’s imports from other global sources as well as the EU with which it has previously concluded a reciprocal free trade agreement, albeit not yet fully operational. Finally, it looks at the legislative framework and related guidelines for the US to conclude new free trade agreements with third countries, and the manner in which such policy objectives relate to the planned US-Kenya FTA. (tralac)

Key Words: Trade Negotiation, AGOA, US-Africa Relations

WEST AFRICA

Formulate specific policy for vegetable value chain dev’t —  The vegetable sector in Ghana will miss out on huge opportunities of the Africa Continental Free Trade Agreement (AfCFTA), once the implementation of the AfCFTA begins without a targeted policy for the development of vegetable value-chain. At a time when prices of vegetables across the country is on the rise, it has become imperative to develop a specific policy for the vegetable sub-sector, which will target the value-chain of specific commodity across the sector. During a national dialogue on vegetables, dubbed; systematic approach to vegetable value-chain policy, pandemic response and AfCFTA Agreement, the Executive Director of Agency for Health and Food Security (AHEFS), Mr. Kwaku Asante said, “There is the need to develop a policy for vegetable sector which is specific enough to address specific commodity needs. Most of the commodities in the vegetables sector require specific value-chain attention, because they have variant needs.”

From the latest inflation figures released by the Ghana Statistical Service (GSS), of the food sector, which drove the general inflation to its highest level since 2017 at 11.3 percent, the vegetable sector contributed 34.9 percent. AHEFS proposed in its final research report that Agricultural policies should be designed for specific crops. For example, there should be vegetable industry policy, cereal and legume production/marketing policy, fruit production and consumption policy, tree crop production policy, among others. “General policies, as done in Ghana, have never been-an effective way of accelerating the growth of the agriculture sector in any country,” the Agency said. Government’s commitment over the years has been to improve and stabilize crop yield and prices in the country in order to alleviate poverty and increase food and nutrition security. However, this has demonstrated through a number of agricultural policies/interventions that appear to target the poor.

“So, until we have a value chain specific commodity policy, we will not be able to address the sector bundled. In most cases, the approach to this sector has been combined approach, which really do not solve the key issues affecting the value-chain specific commodity,” Mr. Asante stated. However, the policies have generally not been specific enough to address the peculiar challenges associated with certain types of crops such as the vegetables and fruits.  Hence, the various agricultural policy interventions have not yielded the intended results as evidenced by the increasing import levels of rice, maize, tomatoes, and onion among others in recent years. (Ghana Web)

Key Words: West Africa, AfCFTA, Market

SOUTH AFRICA

New proposal for South Africa to tax digital services like Netflix and Spotify- The Parliamentary Budget Office (PBO) has published a new tax brief looking at South Africa’s digital economy and possible tax policy considerations. The PBO provides independent, objective and professional advice and analysis to parliament on matters related to the budget and other money bills. In a briefing to parliamentary financial committees in June, the PBO said that South Africa was one of the first countries to introduce tax measures to generate revenue from consumption of commercial activities in the digital economy, which raised additional government revenue since 2014. However, like many other developing countries South Africa has continued to lose tax revenue in the absence of specific tax measures that enable taxes to be imposed on income raised by digitalised economic activities, the PBO said. “Given that South African corporate tax revenue as a share of revenue has declined over the years, and that more businesses have become more digitalised, it is necessary to consider taxation measures that enable revenue to be raised from digital economic activities income,” it said. “By applying this approach, South Africa would be following recent international trends, which would not only guarantee additional needed revenue but also ensure that all business activities contribute their fair share into the fiscus.”

Apart from a digital tax on consumption and income generated by digital economic activities, South Africa could also generate additional revenue from customs duties on cross border digital economic activities, the PBO said. It noted that the current tax regime makes provision for custom duties for non-digital cross border products and services. The group added that online global imports and exports have grown faster than physical imports over the last decade, however this is restricted by a World Trade Organisation (WTO) moratorium that has been in place since 1998. “The revenue losses of Sub-Saharan Africa are expected to range between $600 million and $2.6 billion (R10.8 billion and R46.8 billion) annually in potential custom duties due to the WTO moratorium,” the PBO said.

“South Africa is estimated to have lost between $25 million (R475 million) and $37 million (R700 million) in potential custom duties revenue as a result of the WTO Moratorium. “Unsurprisingly, South Africa and India have raised concerns about the fiscal impact of the 1998 WTO Moratorium over the years, and the duo submitted a proposal to end the WTO Moratorium in March 2020,” it said. (Business Tech)

Key Words: South Africa, Trade, Export Sector

‘Cheap substandard imports crippling cement industry’– THE country’s largest cement producer, PPC Zimbabwe, says urgent measures are needed to safeguard the viability of the local cement industry against the crippling impact of imported cement. Zimbabwe remains a destination for cheap and substandard cement products, which are finding their way through the country’s borders as well as via smuggling despite the fact that the country has the capacity to produce enough to meet local demand. The managing director of PPC Zimbabwe, Mr Kelibone Masiyane said in an interview that urgent measures should be taken to safegurd the country’s cement industry. The country’s cement producers are PPC Zimbabwe, Lafarge Zimbabwe, Sino Zimbabwe, Livetouch and Pacstar Cement and have a combined installed capacity of 2,6 million tonnes per year compared to the country’s annual demand of 1,4 million tonnes.

According to Mr Masiyane, the local cement industry’s competitiveness when compared to regional players is both at a disadvantage and vulnerable. He said the impact of imports is two-fold: firstly there is the threat imports pose on sustainable operation of local cement industry and secondly, there is the hazard of using substandard cement products. The Zimbabwe cement industry is a significant contributor to economic growth, employment creation and trade. Local manufacture of cement is supposed to save the much needed and scarce foreign currency which unfortunately is being spent on importing inferior cement products. Given the significant role that the cement industry plays, all regional countries have adopted tariff measures to protect their cement industries from imports with the exception of Zimbabwe. The country attracts imported cement due to the high prices of its locally produced cement which has seen other countries taking advantage of the price discrepancy to export their excess to the country.

Zimbabwe and its six neighbouring countries have a total production capacity of 39,8 million tonnes per year compared to total demand of 23,5 million tonnes. South Africa, Mozambique and Zambia have huge excess capacity. This poses a serious threat to the local market as regional players find it lucrative to export into Zimbabwe taking advantage of their low prices. PPC Zimbabwe alone used to export more than 100 000 tonnes of cement into the region annually around 2012 but the volumes have dropped drastically due to high cost of production in Zimbabwe which has rendered its prices uncompetitive in the region.  (Chronicle)

Key Words: SA, Economy, Import