INTERNATIONAL

Leveraging Digital Connectivity for Post-COVID Competitiveness and Recovery – Digitisation is integral to more than 15 per cent of global GDP and rising dramatically year-on-year (UNCTAD, 2019). By 2022/2023, it is estimated this could be more than 50 per cent. Even before the COVID-19 pandemic struck, the internet was transforming the world economy. However, various studies consistently show that the majority of digitisation’s benefits flow to traditional businesses, reinforcing the importance for traditional ‘brick and mortar’ companies to embrace digitisation to improve competitiveness and build recovery and resilience. Even if these projections are only half correct, that still means a quarter of the world economy, and a larger proportion with each year that passes, will be increasingly inaccessible to companies of all sizes without affordable connectivity and a skilled workforce. As the proportion of digitisation-dependent economic activity grows, the 29 Commonwealth member countries with less than half their citizens online (see Annex) become correspondingly more disadvantaged. Given the accelerating adoption of digitisation throughout many economies and industrial sectors – both as a reaction to the pandemic and as an attempt to mitigate its effects – this reality presents an almost existential public policy challenge to most of the Commonwealth. With connectivity now a prerequisite for national competitiveness in a digitalised world economy, how can the Commonwealth’s less connected members substantially improve access to affordable connectivity at the same time as they divert resources to deal with a major economic and health crisis? This is not to say that the better-connected Commonwealth members are out of the woods. They just face a different existential challenge: how to muster the political will and internal and

• How can all Commonwealth countries seize the benefits of digitisation while mitigating the effects of rapid technological change and the pandemic?

• If the traditional path to development – production of goods using low-skilled labour and exporting to the developed world – becomes less viable, how can development objectives be met?

• How can developing Commonwealth members leverage technology to provide more opportunities for their micro, small and medium enterprises  (MSMEs) to participate in global value chains (GVCs), given that GVCs represent about 80 per cent of world trade   (The Common Wealth)

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

Developing countries pay environmental cost of electric car batteries – Global consumers are warming up to electric cars, whose sales are expected to jump from 3 million vehicles in 2017 to 23 million in 2030, according to the International Energy Agency. Similar growth is expected for rechargeable batteries, with the market for cathode – the positive electrode of the lithium-ion battery – forecast to reach $58 billion in 2024, up from an estimated $7 billion in 2018. While this is great news for efforts to cut greenhouse gas emissions, an UNCTAD report says the expected boom in mining for the raw materials used to make rechargeable batteries raises environmental and social concerns that must be urgently addressed. “Most consumers are only aware of the ‘clean’ aspects of electric vehicles,” says Pamela Coke-Hamilton, UNCTAD’s director of international trade. “The dirty aspects of the production process are out of sight.” This is because while most of the consumers live in industrialized nations, the lion’s share of the raw materials is concentrated in a few developing countries.

One of the driest regions of the world - More than half of the world’s lithium resources lies beneath the salt flats in the Andean regions of Argentina, Bolivia and Chile, where indigenous quinoa farmers and llama herders must now compete with miners for water in one of the world’s driest regions. Lithium mining requires huge amounts of groundwater to pump out brines from drilled wells, and some estimates show that almost 2 million litres of water are needed to produce one ton of lithium. In Chile’s Salar de Atacama, lithium and other mining activities consumed 65% of the water, causing groundwater depletion, soil contamination and other forms of environmental degradation, forcing local communities to abandon ancestral settlements. “As demand for lithium increases and production is tapped from deeper rock mines and brines, the challenges of mitigating environmental risk will increase,” the report says.

Artisanal mines in the Congo - Nearly 50% of world cobalt reserves are in the Democratic Republic of the Congo, which accounts for over two-thirds of global production of the mineral. About 20% of cobalt sourced from the central African nation comes from artisanal mines, where some 40,000 children work in extremely dangerous conditions, according to UNICEF, the UN’s children's agency. The dust from excavation may contain toxic metals including uranium that are linked to health problems such as respiration diseases and birth defects. The environmental risks are just as worrying. Cobalt mine sites may contain sulphur minerals that can generate sulfuric acid when exposed to air and water. This process, known as acid mine drainage, can devastate rivers, streams and aquatic life for hundreds of years. The environmental impacts of graphite mining are similar. The use of explosives can blow dust and fine particles into the atmosphere, causing health problems in nearby communities and contaminating soils around the site. About 80% of natural graphite reserves are in Brazil, China and Turkey. (UNCTAD)

Key Words: COVID-19, Global Trade, UNCTAD

PAN AFRICA

Framework for Regulatory Oversight for the Regional Energy Market Developed – The Eastern-Africa, Southern Africa and the Indian Ocean (EA-SA-IO) is developing a framework for regulatory oversight for the regional energy market to guide cross border power trading. The final report of the framework has now been presented to the COMESA Regional Association of Energy Regulators for  Eastern and Southern Africa (RAERESA) by the Consultants contracted to undertake the assignment. The framework covers five Regional Economic Communities (RECs), including Easter African Community (EAC), Intergovernmental Authority on Development (IGAD) Indian Ocean Commission (IOC) and the Southern Africa Development Community (SADC) and their specialized energy agencies, association of energy regulators, power pools and centres for renewable energy and energy efficiency for consideration. COMESA /RAERESA Chief Executive Officer Dr Mohamedain Seif Elnasr said in Lusaka that this activity is part of the European Union (EU) funded project on Enhancement of a Sustainable Regional Energy Market in the EA-SA-IO Region. Among the key areas of focus is harmonization and environmental sustainability.

On harmonization of regulations, the report recommends that priority areas should include licensing guidelines, regulations for license applications and processing by national and regional regulatory bodies, and standard license conditions for generation, transmission, distribution, import/export and system operation. The report further recommends harmonization of network regulations including transmission connection/use of system agreements, network tariffs, grid code and associated technical standards. It advocates for harmonization of market access regulations, market surveillance regulations and dispute resolution procedures. Measures to address environmental sustainability through the regulation of the regional energy market are also proposed. These include encouraging renewable energy generation facilitating regional interconnection and increased focus on supply side and demand side energy efficiency. Regulations that help to address these issues include defining procedures to cover integrated resource planning, transmission expansion planning, and strategic environmental assessment. (COMESA)

Key Words: COMESA, COVID-19, Regional Integration

NORTH AFRICA

ECA Office for North Africa pursues programme implementation despite COVID19 - Despite the impact of COVID19 on event organization and technical support missions to member countries, ECA’s Office for North Africa has met half of its targeted results for 2020 so far. This achievement was acknowledged at ECA’s Second Quarter Accountability and Programme Performance Review Meeting (APPR), a virtual meeting held on 20, 21 and 23 July 2020. Participants however acknowledged that the pandemic’s negative impact on stability across North Africa may generate obstacles to the office’s upcoming work, forcing it to postpone activities requiring the physical presence of stakeholders until the situation improves and to focus instead on the organization of virtual meetings and webinars whenever possible. Since January 2020, ECA’s Office for North Africa has cooperated with and supported member countries in several areas including:

• the assessment of the COVID19 impact on national economies (Algeria and Morocco)
• the use of the Integrated Planning and Reporting Toolkit (IPRT) for a better monitoring of SDG implementation in Egypt, Morocco and soon Mauritania and Tunisia
• technical assistance for the achievement of migration targets in accordance with the SDGs and the Global Compact for Safe, Orderly and Regular Migration (GCM)
• technical assistance for the revision of the mining law (Libya)
• support to the AfCFTA implementation, and the design of policies to enhance trade, promote manufacturing and create new jobs (Algérie et Mauritanie)
• design of a new national macroeconomic model (Algeria, Egypt and Mauritania)
• the study of economic distortions and their negative effects on productivity growth with the aim of improving economic policies, enhancing productivity and generate additional employment (Morocco)
• preparations for the second Voluntary National Review (VNR) (Morocco)
• foreign currency mobilization (Sudan)

This work has been carried out in partnership with national institutions (governments, Central Bank of Egypt, Central Bank of Mauritania, High Commission for Planning and the Economic, Social and Environmental Council (CESE) of Morocco, etc.) as well as a wide range of development partners including UN country teams, the World Bank, UNDP, UNITAMS, ILO, IOM, UNDESA and the Policy center for the New South. The office has also been working in partnership with other ECA divisions in areas such as employment, the AfCFTA, gender issues, the IPRT, macroeconomic model building and migration.  “We very much appreciate the quality of our relationship with our colleagues in Addis Ababa and our partners across North Africa and look forward to their extended support to achieve our goals in the coming months”, said Khaled Hussein, interim director of the ECA Office for North Africa. (UNECA)

Key Words: AfCFTA, COVID-19, North Africa

EAST AFRICA

COVID-19 remains an impediment to regional trade; Kenya pushes ahead- At a time when global trade seems so uncertain because of COVID-19 pandemic crisis, a recent paper strikingly highlights that Kenya experienced a significant improvement in exports in early months of 2020 together with the moderation of imports, leading to a marked decline in the trade deficit. The paper published by Brookings and written by Andrew Mold, Senior Economist at UN Economic Commission for Africa and Anthony Mveyange Director of Research at TradeMark East Africa used Kenyan trade data published up through May 2020 to provide a preliminary evaluation of the impact of the COVID-19 crisis on regional trade in the East African Community (EAC).  According to the paper, the curfews, lockdowns, and cross-border disputes linked to the crisis provoked a sharp decline in intra-regional trade, with a dramatic fall in Kenyan exports to Uganda, Tanzania, and Rwanda. These trends are worrisome because Kenya is the major exporter and importer of the East African Community (EAC), accounting for around 46 per cent of exports and 41 per cent of imports for the whole region.

Recent trade evidence from East Africa - Kenyan textile exports to the United States and flowers and shipments of vegetables to the European Union were severely affected, largely due to both suspensions of international flights and the collapse of demand in target markets.  The paper notes, however, that despite these disruptions, not all supply chains were affected. Kenyan tea exports peaked at just under 58,000 tonnes in April – a record high. Similarly, the volume of fruit exports surpassed the level reached during the 2019 season. Most of these products were shipped to countries like Egypt, Pakistan, the United Arab Emirates (UAE), and the U.K.  Data from Ugandan authorities reveal that informal trade collapsed in April 2020, as cross-border small-scale trading was prohibited. Border communities are highly dependent on this trade, and the closure of the frontiers has entailed additional hardship in these communities.

 Coordinated intra-regional trade is critical  - Another important theme highlighted in the paper is the necessity of a coordinated EAC-wide approach for intra-regional trade in these challenging times, ensuring that countries in the region are cushioned from the COVID-19 crisis fallout.  The paper stresses that the urgency of implementing the African Continental Free Trade Agreement (AfCFTA) is even more palpable. Its rapid implementation, accompanied by additional trade facilitation measures, could significantly mitigate COVID-19's negative impact on the continent’s economy.   (UNECA)

Words: AfCFTA, East Africa, Regional Trade

Sudan Launches the Cost of Hunger in Africa National Report– The Republic of Sudan has today launched The Cost of Hunger in Africa (COHA)-Sudan report. The report was launched through the National Council for Child Welfare, which is the implementing body and coordinating partner for the COHA in Sudan. The COHA study was undertaken in Sudan from October 2018 to December 2019 and the launch of the report was graced by Hon. Minister of Labor and Social Development Mad. Lena Elsheikh.  “This COHA programme is a priority for us in the government and the outcomes and indicators in this report are very important as we seek to review the policies relating to children. We need to start this programme this year and it is our commitment in the ministry to achieve the agenda of sustainable development and have a quick response to fix this situation in order to contribute to social and economic development,” emphasized Hon. Lena Elsheikh.

The Sudan COHA results will be instrumental in positioning nutrition as a multi-sectoral development issue, helping stimulate national discourse on nutrition, inform concrete policy actions, and affirm national political commitment to increase multi-sectoral investments in nutrition. The study also shows the possible economic returns that can be gained if appropriate investments in nutrition are undertaken. Sudan is among the twenty-one member states that have so far completed the study. The Cost of Hunger in Africa studies aim to generate evidence to inform key decision-makers and the general public about the cost African societies incur for not addressing the problem of child undernutrition. The results provide compelling evidence to guide policy dialogue and increase advocacy for the prevention of child undernutrition.

The statement of H.E Amira El Fadil, Commissioner for Social Affairs, was delivered virtually by Dr. Margaret Agama-Anyetei, Head of Division for Health, Nutrition and Population. H.E Amira El Fadil, acknowledged that good nutrition contributes to good health in children and is a prerequisite for any nation’s economic productivity. “The intertwined relationship between nutrition security, poverty and development, recognizes that long-term nutrition security, is a function of decisive policies and actions that cut across a broad spectrum of sectors.”  In March 2012, the regional COHA study was presented to African Ministers of Finance, Planning and Economic Development at the 5th Joint African Union (AU) and Economic Commission for Africa (ECA) Conference of Ministers of Economic Planning and Finance held in Addis Ababa, Ethiopia. At the meeting, the Ministers issued a resolution affirming the importance of the Study and recommending its advancement beyond the initial stage. The study has been a useful tool for policy making, improving nutritional data analysis, and developing national analytical capacity.(AU)

Words: Regional Integration, East Africa, AU

WEST AFRICA

World Bank approves $30m grant to support agricultural productivity in Sierra Leone– The World Bank Board of Executive Directors approved a $30 million International Development Association (IDA) grant to support agricultural productivity and access to markets for smallholder farmer-agribusiness in Sierra Leone.  This additional financing for the Smallholder Commercialization and Agribusiness Development Project (SCADeP) will enable the project to invest in roads and bridges to improve connectivity thereby providing access to more remote areas of high agricultural production. Specifically, it will help build critical bridges across key river crossing points currently served by manual cable ferries. These manual ferries are mostly out of service due to increasing risks of accidents particularly during the rainy season when water levels are high.  "The World Bank is focusing its interventions toward helping the agricultural sector recover quickly from the effects of COVID-19 and contribute toward higher medium- to long-term agricultural growth required to reduce poverty among smallholder farmers and promote inclusive growth," said Gayle Martin, World Bank Country Manager for Sierra Leone. "This project is aligned with the economic diversification and growth agenda of the Government."

Smallholder farmers are the drivers of many economies and play an important role in promoting livelihoods and food security amongst the rural poor. The additional financing is strengthening productive business linkages between farmers and selected agribusiness firms and other commodity off-takers. It builds on the results achieved by the project and will scale up the provision of improved seeds and fertilizers to increase farmers' productivity.  So far, the SCADeP project has supported the rehabilitation and maintenance of 166 km of feeder roads and the construction of 192 culverts and 6 bridges, thereby providing year-round access to farms, markets, schools and health centres for 77 communities in nine districts across the country. Average travel time on these roads has seen a significant reduction from 20min/km to about 2min/km. Another key accomplishment is a study to assess the agribusiness/out-grower landscape in Sierra Leone. This framework is serving as a guideline for the creation of effective and mutually beneficial long-term partnership arrangements between farmers, nucleus commercial farmers, agro-processors and exporters.  (Devdiscourse)

Key Words: West Africa, World Bank, Trade

CENTRAL AFRICA

Central Africa Economic Outlook 2020 - Coping with the COVID-19 Pandemic - As in 2018, the real GDP In 2019, the international economic environment experienced a slight dip in global economic growth to 2.9% from 3.6% in 2018. This slowdown was mainly due to trade and geopolitical tensions between the USA and China and uncertainties surrounding the Brexit. The projections made before the outbreak of the coronavirus pandemic (COVID-19) forecast global real GDP growth rates of 3.3% and 3.4% in 2020 and 2021, respectively. These projections have been revised downwards in light of the risks to global economic growth from the pandemic whose impact has caused a decline in international trade, a slump in oil prices, a drop in investment, financial resources and tourism revenues, and pressure on health and social systems. The IMF has now revised its global growth forecast down by 6.3 percentage points to-3% in 2020 because of the COVID-19. According to African Development Bank estimates, Africa’s real continental GDP growth rate is forecast to contract to -3.2% in 2020, representing a loss of 7.3 percentage points compared with the pre-pandemic forecast of 3.9%. In general, the severity of the COVID-19’s negative impact on global growth will mainly depend on: (i) the scale and speed of the virus’s spread throughout the countries; (ii) the effectiveness of health and economic measures adopted by governments to contain it; and (iii) the amount of resources committed to supporting the economies. In 2019, Central Africa’s growth rate was the same as in 2018, which remained lower than the Africa average(3.2%).

growth rate was 2.8% in 2019 - one of the lowest in the five   ofthe continent. Growth was stronger in East Africa (5.2%), North Africa (3.7%) and West Africa (3.6%). Only Southern Africa (0.3%) posted lower growth in 2019. In 2019, the region’s key macroeconomic indicators improved: (i) average inflation at2.6% was the lowest of all the regions; (ii) the fiscal balance showed a surplus equivalent to 0.5% of GDP making Central Africa the only region without a deficit; and (iv) the current account deficit narrowed to 1.9% of GDP, the best   all the regions. The prospects for medium-term economic growth in Central Africa were favorable before the coronavirus pandemic. The pre-COVID-19 real GDP growth rate for the region was projected at 3.5% in 2020 and 2.9% in 2021, supported by the continuing implementation of the reforms embarked upon, dividends from key investments, development of economic diversification and debt management efforts made. However, the prospects are now gloomier since the onset of the pandemic. In the latest macroeconomic projections that factor in the disease’s potential impact, AfDB has projected a growth rate of -2.5% for the region in 2020 in a best-case scenario where the situation is controlled in the short term, i.e. a drop of 6.1 percentage points compared with its original pre-COVID-19 projection of 3.5%. In a worst-case scenario, where the pandemic is more slowly contained, the estimated growth rate for 2020 is -4.3%, i.e. a drop of 7.8 percentage points compared with pre-COVID projections. (AfDB)

Key Words: Central Africa, Economic Growth, COVID-19

SOUTHERN AFRICA

The Looming Brexit Cliff – What it means for South Africa and for SACU – On 30 June 2020, the United Kingdom (UK) and the European Union (EU) passed a final threshold. Although the UK formally left the EU on 31 January in terms of the Withdrawal Agreement between the EU and UK, that agreement provided for a transition phase until 31 December this year which could be extended for a further period if both parties agreed to an extension by 30 June. After this Withdrawal Agreement, the British parliament passed its own Withdrawal Act which made it illegal to extend the transition period but that is of no relevance in any event as the 30 June, which was the date for agreeing a further extension, has now passed. One of the objectives of the transition phase was to allow the parties time to conclude a Free Trade Agreement. Although there have been a series of scheduled talks, not much progress has been made in getting to an agreement. Negotiating trade agreements is famously complex, politically and technically, and typically takes years of negotiation.

There are many very difficult issues that remain unresolved but it would appear three principal matters are holding up progress, namely resolving the Northern Ireland Protocol (to prevent a hard border between the Republic of Ireland and Northern Ireland – at present, the Withdrawal Agreement places Northern Ireland within the EU’s customs union and effectively establishes an EU customs border in UK territory); level playing fields as regards EU requirements (standards, state-aid of domestic companies, mutual recognition of certification and permissible divergence); and access by EU countries to UK fishing waters. The prospect of the UK leaving the EU at the end of the year with no deal is a pretty sound working assumption. And it is going to be massively disruptive. The UK is the EU’s second or third largest economy. Almost half of all UK product exports are to other EU countries and more than half of the UK’s imports are from the EU. The disruptions will not be limited to Europe but also to any country trading with either of them.

Whether the UK and the EU can negotiate a free trade agreement is of secondary importance. The UK government’s approach under successive Conservative Party governments (three since the 2016 Brexit referendum) has been that the UK would leave the EU customs union – to enable the country to enter into its own trade agreements with other countries; and the single market – to enable it to “take back control” of its legislative and regulatory powers. Discussions surrounding international trade and trade agreements tend to focus on tariffs and tariff rate quotas (TRQs – the quantity of goods that can be imported at a lower or zero tariff, before a higher tariff applies). Global trade is, however, not only about tariffs and TRQs but about how easily things can be moved around and delivered to customers. Containerisation of shipping has had a far bigger impact on global trade flows than any trade agreements could have done on their own.

Under World Trade Organisation (WTO) rules, that basic principle when dealing with tariffs are that: every member must treat every other country equally (non-discrimination principle). As such, every WTO member must decide what import tariffs it applies on every category, sub-category, sub-subcategory etc of product lines and that the WTO-based import tariff schedule applies to every exporter, irrespective of the source country. The main way to secure special arrangements between countries and to deviate from these WTO tariffs applicable to all WTO members is through a free trade agreement (FTA) between countries. But for a free trade agreement to be WTO compliant, it must cover substantively all trade in goods between the two countries, not just selected goods. (tralacblog)

Key Words: SADC, COVID-19, WTO

African Development Bank approves first ever crisis response budget support of R5 billion to fight COVID-19 – The Board of Directors of the African Development Bank has approved a loan of approximately R5 billion ($288 million) to the government of South Africa, as the country battles one of the largest COVID-19 caseloads in the world. South Africa confirmed its first case of COVID-19 on 5 March 2020 and is currently the most affected in Africa, and among the top five in the world in terms of confirmed cases (381,798 as at 22 July, with 5,368 deaths). The loan falls under the Bank’s $10 billion COVID-19 Response Facility and will finance South Africa’s COVID-19 Response Support Program, and represents the Bank’s first ever budget support to the country. The operation is designed as a Crisis Response Budget Support Operation prepared following a request from the government of South Africa.

The purpose of the program is to: (i) protect lives and promote access to essential equipment to prevent infection, such as protective personal equipment, sanitizers and gloves (ii) protect livelihoods by preserving jobs, incomes, food security and access to essential public services (iii) protect firms by supporting enterprises in the formal and informal economy to withstand the impacts of COVID-19 and prepare for economic recovery. South Africa’s ability to respond to the pandemic has implications for neighbouring countries as well as the continent as a whole, given its position as Africa’s second-largest economy after Nigeria. Even before the pandemic, South Africa was experiencing an economic slump. In 2019, the country registered GDP growth of 0.2% – the lowest in a decade – and according to Bank estimates it could drop to the worst in 90 years in 2020. Projections show a GDP contraction of 6.3% and 7.5% under baseline and worst-case scenarios, respectively.

These growth forecasts have placed budgetary constraints on the government’s ability to deal with the health crisis. In order to ensure a complementary intervention, the African Development Bank operation was designed in collaboration with other partners, including the International Monetary Fund, World Bank and the New Development Bank. South Africa is ranked as the most prepared African country to deal with a pandemic, according to a Global Health Security (GHS) Index. Yet significant challenges remain in the public health sector, including underfunding and human resource shortages. While the private health sector is better equipped, it remains unaffordable to the majority of South Africans.  (AfDB)

Key Words: SA, COVID-19, AfDB

Tobacco earnings surpass US$600m – Zimbabwe has so far earned over US$600 million from tobacco, with most farmers now concentrating on the 2020/21 season seedbeds ahead of transplanting in September. The country has for far earned US$618 million from the golden leaf, with exports constituting US$269 million and sales to date amounting to US$359 million from 147.2 million kilogrammes of the crop that were delivered under both the contract and auction systems. The Tobacco Industry and Marketing Board latest statistics show that the country has exported 81.1 million kilogrammes of semi processed tobacco to different continents with the Far East being the major buyer. The Far East has imported 219.7 million kg of tobacco from Zimbabwe worth US$139 million, while African countries are the second major market having imported 14.3 million kg worth US$35.5 million. The European Union imported 14 million kg worth US$42 million, Middle East 12.8 million kg valued at US$21 million. Europe has imported 8.4 million kg from Zimbabwe worth US$ 24.8 million, while the Americas bought 1.9 million kg worth US$5.4 million.

Zimbabwe Farmers Union president, Mr Abdul Nyathi, said farmers were also concentrating on their seedbeds ahead of transplanting dates. “Farmers have started planting their seedbeds for the irrigated crop,” he said. “The only challenge at the moment is water for irrigation. Dam levels have gone down while some boreholes have dried due to the drought. “Some farmers are having difficulties irrigating their crop. Costs have also increased as the power charges have increased.” Mr Nyathi said some farmers had been hit hard by the Covid-19 pandemic as they were failing to get all the labour they required.“Farmers end up having different shifts and in the end it takes longer to complete tasks and it becomes expensive,” he said. Zimbabwe Commercial Farmers Union president Mr Shadreck Makombe said most farmers had sold their tobacco, except some who had delayed selling due to the fluctuating rates. (The Herald)

Key Words: Zimbabwe, COVID-19, Export Sector