Today’s Topics:

COVID-19 is exacerbating the global trade finance gap -  (Trade4DevNews)

Impact of COVID-19 on African Aviation and Economies is Worsening -  (IATA)

What to expect as China-US trade talks resume – (BBC)

The future of public spending: Why the way we spend is critical to the Sustainable Development Goals – (The Economist)

The Official hand over and Commissioning of the African Continental Free Trade Area (AfCFTA) Secretariat Building – (AU)

In Wake of COVID-19, African Union to Keep AfCFTA on Track with Digital Technology – (AU)

Africa Drives Forward Again – ( Lubes’N’Greases)

East African Community battles trade disruption – (African Business)

ECOWAS Experts Meet on the Deployment of Regional Visa –A (ECOWAS)

SADC discusses Vision 2050, RISDP 2020-30 – (tralac)

SADC Day Message by His Excellency Dr. John Pombe Joseph Magufuli, President of the United Republic of Tanzania and SADC Chairperson, 17th August, 2020 – (SADC)

INTERNATIONAL

COVID-19 is exacerbating the global trade finance gap- The COVID-19 pandemic is a tragic health crisis causing irreversible damage to the global economic and financial system. It is also worsening trade restrictions and reducing trade volumes globally. Coupled with the scarcity of financing in general, and trade financing in specific, coronavirus is causing serious damage to developing economies. Least developed countries (LDCs) are among the hardest hit. Their already fragile economies are facing further challenges, as the value of their exports plummet and their borders are closed to trade and tourism, like most countries worldwide. Local and foreign investments are drying up. Small business revenues and orders have been reduced drastically. The cost of financial transactions is increasing, as working with financial institutions in LDCs is perceived to be riskier than before. The issuance of letters of credit and other trade finance instruments is becoming difficult, if available at all, and the appetite of correspondent banking is decreasing each day as the crisis unfolds.

Because of this, LDCs are seeing a rapid depletion of their foreign reserves, and their financial institutions are facing a shortage of liquidity. The persistence of this situation could lead LDCs to drift further away from global value chains and to be left out of the international trade system. Access to trade finance was already an issue prior to the pandemic. The global trade finance gap is estimated at $1.5 trillion and it is mostly impacting small and medium-sized enterprises in developing countries. Over 50% of requests for financial support to trade are rejected. The actions that were being taken to reduce the global trade finance gap – including policy advancement, technical assistance, capacity building, regulatory reform and increased financing – are more important now than ever before, to ensure that the world’s most vulnerable countries are not further entrenched in economic inequality because of the pandemic.  (Trade4DevNews)

Key Words: Global Trade, Investment Policy, COVID-19

Impact of COVID-19 on African Aviation and Economies is Worsening – The International Air Transport Association (IATA) released new data indicating that the impact of COVID-19 on Africa’s aviation industry and economies has worsened sharply since the previous assessment in April.

• Job losses in aviation and related industries could increase by up to 3.5 million. That is more than half of the region’s 6.2 million aviation-related employment and 400,000 more than the previous estimate.
• Full-year 2020 traffic is expected to plummet by 54% (more than 80 million passenger journeys) compared to 2019. Previous estimate was a fall of 51%.
• GDP supported by aviation in the region could fall by up to $35 billion. IATA previously estimated a $28 billion decline.

"COVID-19 has devastated African economies and brought air connectivity across the continent to a virtual standstill. And the situation is getting worse. The economic consequences resulting from a disconnected continent are severe. Millions of jobs and livelihoods are at risk in family-run enterprises and large corporations along the entire travel and tourism value chain. For Africa’s economic recovery and future prosperity, it is essential to expedite the safe restart of the industry,” said Muhammad Al Bakri, IATA’s Regional Vice President for Africa and the Middle East.  (IATA)

Key Words: Africa, Air Aviation, COVID-19

What to expect as China-US trade talks resume – The US and China are due to resume trade talks in the coming days that last took place in January before tensions escalated. The two economic superpowers have been embroiled in a trade war since 2018 that has damaged the world economy. In January both countries agreed to ease restrictions imposed on imported goods from each another. However, relations have become increasingly strained in the last six months over a wide range of issues. US President Donald Trump has clashed with China recently over two Chinese apps, TikTok and WeChat, which could be banned in the US over national security concerns. This is the latest sticking point between Washington and Beijing; others include China's new national security law for Hong Kong, communications firm Huawei and the origin of the coronavirus. These clashes come on top of the already-sensitive trade relationship between the world's two biggest economies.

"Both sides will be doing a temperature check to see where things stand since January, and indeed they have a lot to talk about," Nick Marro, a global trade expert at the Economist Intelligence Unit (EIU) told the BBC. "At the very least, we expect policymakers in Beijing to now be questioning their commitment to a trade deal that has done little to protect Chinese companies from US pressure." While WeChat, TikTok and Huawei have all come under fire recently, the Trump administration has added dozens of Chinese companies to economic blacklists. "The US government will take further measures to prevent US data from being stored on Cloud-based systems owned by Chinese firms as well as impacting upon the use of undersea cables connecting the US to the global internet," added Rajiv Biswas, a chief economist at London-based consultancy IHS Markit. (BBC)

Key Words: Global Trade, US-China Trade Agreement, COVID-19

The future of public spending: Why the way we spend is critical to the Sustainable Development Goals – The implementation of better public spending practices can play a critically important role in helping countries make progress towards the SDGs. As governments globally are starting to recognise, public sector procurement is more than simply an operational function—it can be a powerful force for change.  Public spending has an extremely large footprint, typically representing 15-30% of GDP. Which projects governments choose to spend money on—and who they spend it with—therefore makes a substantive difference. Rather than being “neutral”, such spending will positively or negatively impact everything from local employment to levels of carbon emissions, making public spending integral to many of the SDGs.  Adopted by UN member states in 2015, the SDGs set out 17 clear goals aimed at reducing poverty, hunger and disease, building peaceful, inclusive and equal societies, protecting the planet and supporting sustainable economic growth. These are bold aims. But the goals, through their many targets and indicators, also lay out a critical guide for how countries ought to steer money and government policy towards areas where they can do the most good. In this respect, how local and national economies spend money will be just as important as what they spend it on.

Procurement is a tool for government to carry out its development agenda. − Sarah Adwoa Safo, minister of state in charge of public procurement for Ghana  Severe funding gaps place public spending at the heart of the matter. It is estimated that between US$3trn and US$5trn will be needed every year to meet the SDGs by 2030. Estimates vary widely, but most put the annual funding shortfall among developing economies in the region of US$1trn and US$2.5trn (see Figure 1)1.Effective public spending can help to ease this strain through less wasteful and more efficient spending practices—which free up resources—and the procurement of goods and services in ways that promote social and environmental sustainability. The way in which procurement is conducted can have positive or negative impacts on the economy, society and the environment. “Procurement is a tool for government to carry out its development agenda,” says Sarah Adwoa Safo, minister of state in charge of public procurement for Ghana, the only African government with a minister dedicated to public procurement. As our previous UNOPS-supported research has explored, governments can benefit most when they look beyond mere financial value to a “lifecycle costing” approach that considers the social and environmental value of goods and services over time. (The Economist)

Key Words: Global Trade, The Economist, COVID-19

PAN AFRICA

The Official hand over and Commissioning of the African Continental Free Trade Area (AfCFTA) Secretariat Building - Monday,17^th August, 2020 TIME: 1400h East African Time -  The African Union (AU) Assembly of Heads of State and Government during their 33^rd Ordinary Session held from 09 - 10 February 2020 in Addis Ababa, Ethiopia. H.E Wamkele Mene , from South Africa, was selected as the first Secretary General (SG) and was sworn-in on 19 March 2020, for a four-year mandate. The AfCFTA Secretariat is in based in Accra, Ghana. The Secretary General is expected to provide leadership and technical support to AfCFTA Secretariat and overall management of the day-to-day management of the AfCFTA Secretariat, implementation of the AfCFTA Agreement and strategic collaboration; stakeholders' engagement; and resources mobilization for the implementation of the AfCFTA Agreement.

The Agenda 2063 flagship initiative the African Continental Free Trade Area (AfCFTA) refers to a continental geographic zone where goods and services move among member states of the AU with no restrictions. The AfCFTA aims to boost intra-African trade by providing a comprehensive and mutually beneficial trade agreement among the member states, covering trade in goods, services, investment, intellectual property rights and competition policy. Other continental frameworks include Boosting Intra African Trade (BIAT) which aims to deepen Africa's market integration and significantly increasing the volume of trade that African countries undertake amongst themselves from the current levels of about 10-13% to 25% or more within the next decade and The Action Plan for the Accelerated Industrial Development of Africa (AIDA), which aims to mobilize both financial and nonfinancial resources and enhance Africa's industrial performance. Register here: https://bit.ly/30Y8aja. (AU)

Words: AfCFTA, Trade, Regional Integration

In Wake of COVID-19, African Union to Keep AfCFTA on Track with Digital Technology – Since the advent of the Covid-19 pandemic, the AU Commission, like most intergovernmental organisations around the world, has shifted most of its activities online. In this context, the Commission believes that for the current AfCFTA operationalisation timeline of 1^st January 2021 to be met, and the decision of African Leaders on the fast-tracking of processes leading to the commencement of trading to be implemented, outstanding AfCFTA negotiations must move online too. AU member states have outlined a number of concerns regarding the use of virtual systems, especially regarding infrastructure reliability, security and confidentiality.

In this regards, the African Union Commission has received with open hands many offers of support to help address these concerns that have come from the continental private sector, notably the African Virtual Trade-Diplomacy Platform (AVDP), itself a part of the broader AVRIVA (African Virtual Resilient-Integration for a Vibrant Africa) framework being developed as a public-private initiative between the African Union Commission and the over two dozen major multinational African corporations and pan-African institutions operating under the umbrella of the AfroChampions Initiative.

The AVDP and the AVRIVA concept aim to rally support towards a campaign to keep the AfCFTA on track using technology by enabling Member States to participate effectively and securely in the outstanding negotiations of the AfCFTA. This will help to ensure that African countries are able to meet the new date for the start of trading under the AfCFTA of 1^st January 2021 as set by African Heads of State and Government, who are strongly committed to getting the AfCFTA agenda back on track after the postponement of the start of trading initially set for 1 July 2020. This is also bearing in mind that all analyses and studies confirm that the AfCFTA represents Africa’s best insurance policy and strategy to recover from the Covid-19 pandemic. (AU)

Key Words: AU, AfCFTA, Regional Integration

Africa Drives Forward Again – African countries account for just 1% of global new car sales, and in the past making vehicles there has been no easier than selling them. In fact, it has been a “monumental failure,” said Volkswagen Group South Africa’s CEO, Thomas Schafer, in an article published by the Economist. During an October 29 interview for that article, Schafer said that VW is now trying again in as many as five African countries, and it isn’t alone; executives with Ford, Toyota, Suzuki, Nissan and others are signing deals and starting assembly lines across the continent. VW’s current plant in Rwanda has capacity of up to 5,000 vehicles per year, and Ford’s facility in Nigeria is comparable. The results of these expansion efforts will help to shape global lubricants trends in the coming decades. According to a study published by consulting firm Deloitte Africa, the continent’s motorization rate was 44 vehicles per 1,000 people in 2015, a clear contrast with the global average of 180. But the United Nations says it has the fastest population growth and urbanization rate of any continent, and increased political stability since the end of the Cold War has brought economic growth. For an emerging middle class, cars have become increasingly affordable. “Demand for energy is increasing at a much faster pace in Africa than in other regions of the world,” said Rakesh Vyas, a market development advisor for ExxonMobil. “Car ownership and motorization rates are skyrocketing.”

There are multiple ways this surge in transportation demand can be satisfied, each solution having different implications for lubricants. Africa’s current system relies on importing used vehicles. This method dictates that lubricant demand will follow the speed at which these aging options are displaced by new cars or younger imports.  Precise figures for Africa’s vehicle stock and lubricants markets aren’t always reliable, as data-gathering efforts vary by country. However, according to the U.N., the continent accounts for about 1.2% of global vehicle production and 5% of global lubricants demand. In 2018, the total vehicle count was about 45 million, and that amount could triple in the next 20 years, according to the United Nations Environment Programme.  New vehicles represent a small share of the overall market. In Nigeria—Africa’s largest economy and home to roughly a fifth of its people—for every new car sold in 2017, there were 131 used car sales, according to UNEP. Vehicle demand is typically met by imports of used light-duty vehicles from the United States, Japan and Europe.  (Lubes’N’Greases)

Words: Market, Business, Africa

EAST AFRICA

East African Community battles trade disruption - Most of East Africa’s imports pass through Kenya’s port of Mombasa or Tanzania’s port of Dar es Salaam, both of which saw trade volumes fall during the initial stages of the virus.  Mombasa, which accounts for roughly 60% of regional imports, saw a 4.7% reduction in volumes between January and May as Chinese exports in raw materials and capital goods fell, says Gilbert Langat, CEO of the Shippers Council of Eastern Africa.  While this affected Kenya’s manufacturing sector and other industries, it spelt greater trouble for landlocked countries like Uganda, Rwanda, Burundi and South Sudan which rely on the port of Mombasa for imported goods.  Around 85% of the cargo landed at Mombasa is loaded onto Kenya’s standard gauge railway (SGR) and transported to Nairobi before it is moved by truck to Uganda and beyond via the “northern corridor”. Kenya is the main transit hub for the EAC region, accounting for around 46% of total exports and 41% of total imports.  While most countries allowed nationwide logistics to continue despite implementing widespread lockdowns, much of the intra-regional activity was greatly reduced due to border issues.  Before Covid-19, it had taken cargo around 3.5 days to be transported from Mombasa to Kampala, 7 days to Kigali, 10 days to the DRC and 14 days to South Sudan. The virus more than doubled the length of time taken to transport goods: the journey to Kampala extended to 7-10 days, while it took 21 days to Kigali and far longer to the DRC and South Sudan.  “Before Covid-19 we were able to get cargo to Kampala for between $2,000 to $2,200 – now it has increased to $3,200,” says Langat. 

Technology offers solution - The delays were largely driven by regulatory changes implemented by each country to minimise the risk of foreign lorry drivers spreading the virus. A Kenyan truck driver driving to Rwanda via Uganda would likely need to be tested for Covid-19 three times – once in each country – rather than being able to use paperwork accepted across the entire region. At the beginning of the pandemic, these tests were analysed in urban centres far from national borders leaving truck drivers stranded for days in inhospitable border towns.  This level of mistrust and lack of coordination led to calls for a regionally mandated response from the Arusha-based EAC Secretariat. The regional body published a set of “administrative guidelines” for the movement of goods and services during Covid-19 – which included advising countries to use gazetted routes and encouraging truck drivers to travel with a maximum of three people – but many believed it did not go far enough.  To facilitate border crossings, TradeMark East Africa (TMEA) has worked with EAC member states to develop an app that stores health certificates issued by test centres working to agreed standards. (African Business)

Key Words: East Africa, Business, Regional Integration

WEST AFRICA

ECOWAS Experts Meet on the Deployment of Regional Visa – Experts on visa issues from the ECOWAS region met on the 4th of August 2020 on the deployment of the regional Visa (ECOVISA) billed to facilitate the seamless movement of citizens of ECOWAS Member States in the region. Among others, the virtual meeting afforded the opportunity to present and discuss additional as well as proposed security features of the ECOVISA document and the necessary accompanying measures for the implementation of the decision of the heads of state and government of ECOWAS on the matter. Besides consolidating the proposed road map for the roll-out and deployment of the ECOVISA, the experts are also examining data exchange/registration platform for migrants amongst Member States’ consular services, host country immigration services and ECOWAS itself.

Declaring the meeting open, the ECOWAS Commission’s Commissioner for Trade, Customs and Free Movement Mr. Tei Konzi noted that in recognition of the fact that the ECO Visa should help facilitate mobility in the ECOWAS area, it is important that delegates make concrete recommendations for future validation by regional ministers in charge of security and migration. He stressed that in working out modalities for the proper implementation of ECOVISA, Member States are to be engaged in developing a regional visa roadmap for the process, emergence of a Schengen type visa for the region while reassessing and updating the consideration of the emerging evolution of migration in the ECOWAS region especially during the COVID-19 period. Commissioner Konzi particularly took note of the need for a “consolidation of the roadmap proposed for the deployment of ECOVISA, the data exchange and registration platform for migrants at the level of consular services of ECOWAS Member States and immigration from host countries and ECOWAS”. Specifically, Mr. Konzi also disclosed that the Commission’s expectations are for the ECOVISA be made a powerful tool for tourism, a source of foreign exchange as well as for enabling regional environment for a free movement of investors and foreign workers. He thanked stakeholders, representatives of the technical and financial partners of ECOWAS, who support the Commission for the strengthening of regional integration, peace, cohesion and socio-economic development. The Chair of the meeting and Commissioner of Police of Niger, Mr. Hassane Ismail harped on the importance of the meeting’s agenda while looking forward to the progress to be made with the recommendations that will emanate from the day’s deliberations.  (ECOWAS)

Key Words: ECOWAS, Regional Integration, West Africa

SOUTHERN AFRICA

SADC discusses Vision 2050, RISDP 2020-30 – The draft SADC Vision 2050 and Regional Indicative Strategic Development Plan (RISDP) 2020-30 were presented for approval to the SADC Council of Ministers, which was held via video conferencing on 13 August and was chaired by Mozambican Minister of Foreign Affairs and Cooperation, Verónica Dlhovo. The Vision 2050 sets out the long-term aspirations of SADC over the next 30 years while the RISDP 2020-30 outlines the proposed development trajectory for the region until 2030. The 10-year strategic plan is informed by the aspirations as set out in the long-term vision. Under the draft Vision 2050, the region is expected to have five aspirations:

• Creation of a conducive environment to foster regional cooperation and integration and uphold fair/free movement of goods, people or labour, capital and services;
• Accelerated mobilisation of resources from within the region and external sources to fast-track the implementation of SADC policies and programmes, and a shift away from the current reliance on International Cooperating Partners towards a more diversified approach that is better integrated and complementary;
• Improved implementation of SADC policies and programmes through the effective realisation of roles and responsibilities undertaken by various actors and entities through institutional reforms at the levels of the SADC Secretariat, SADC National Committees and National Contact Points;
• Strengthened compliance by Member States through the implementation of effective compliance monitoring and assurance mechanisms to track progress in implementation of SADC programmes and compliance to Protocols and legal instruments. This will require regular review of the SADC RISDP 2020-30 to allow the effective and authentic application of variable geometry, facilitate active learning and the leveraging of relevant and emerging technologies; and
• Strengthening of visibility and awareness programmes as a means to trigger and maintain the interest, awareness and participation of the SADC citizenry and Member State officials responsible for driving the regional integration agenda.

Both the draft SADC Vision 2050 and RISDP 2020-30 envision a peaceful, middle- to high-income industrialised region, where all citizens enjoy sustainable economic well-being, justice and freedom.  (tralac)

Key Words: SADC, trade, Regional Integration

SADC Day Message by His Excellency Dr. John Pombe Joseph Magufuli, President of the United Republic of Tanzania and SADC Chairperson, 17th August, 2020  – It has been 40 years since our Organization was established in Lusaka, Zambia, in 1980; and exactly 28 years since the transformation of the Southern African Development Coordination Conference (SADCC) into the Southern African Development Community (SADC) in Windhoek, Namibia, in 1992. I, therefore, would like, as Chair of SADC, to extend warm greetings and congratulations to all SADC citizens on this Special Day for our Community. In the same vein, I take the opportunity to pay a well-deserved tribute to our Founding Fathers, who took the historic stride to form this noble Organization in order to serve as the vanguard of our aspirations for freedom, unity and solidarity. Indeed, without their vision and solidarity this day would have not been possible.

It is unfortunate that, today, not many of our Founding Fathers are still alive. In September last year, we lost one of our few remaining Founding Fathers of this Community, the Late Comrade Robert Mugabe, former President of the Republic of Zimbabwe. Once again, on behalf of the SADC, I extend my most sincere condolences to the Government and People of the Republic of Zimbabwe for this great loss. In this connection, I would like to take this opportunity to inform you that, this year, on 14thOctober, Tanzania will mark 21years since the demise of yet another Founding Father of this Organization, who was also the Father of our Nation, the Late Mwalimu Julius Kambarage Nyerere; and on the 13thApril 2022, we will celebrate the centenary of his birth.
 We, therefore, invite all Member States and all well-wishers to join us in remembering Mwalimu Nyerere and celebrating his legacy. Needless to say, the late Baba wa Taifa was a true son of Africa who left a formidable legacy not only for our region but also the continent in general. (SADC)

Key Words: SADC, trade, Regional Integration