ATPC DAILY DIGEST 20 AUGUST 2020
Today’s Topics:
Goods barometer confirms steep drop in trade but hints at nascent recovery – (WTO)
The clock is ticking on electronic advance data for trade and ecommerce in LDCs – (Trade4DevNews)
AfCFTA could boost Dubai-Africa trade by 10% over next 5 years – (Ghana Web)
Africa trade and Covid‑19The supply chain dimension – (ODI/ATPC)
Covid-19 impacts investors’ energy strategies in Africa – (African Business)
AUDA-NEPAD launches the MSME Academy for all Africa’s Micro Small and Medium Enterprises- (NEPAD)
Ugandan ecommerce platforms power recovery from COVID-19 crisis – (Trade4DevNews)
WCO conducts a virtual AEO training workshop for Seychelles Revenue Commission (SRC) – (WCO)
Mauritius oil spill puts spotlight on ship pollution – (UNCTAD)
Ghana should not be a spectator in AfCFTA - Business Devt Ministera – (Ghana Web)
INTERNATIONAL
Goods barometer confirms steep drop in trade but hints at nascent recovery – World merchandise trade likely registered a historic fall in the second quarter of 2020, according to the latest reading of the WTO’s Goods Trade Barometer, a real-time gauge of trends in global trade. Additional indicators point to partial upticks in world trade and output in the third quarter, but the strength of any such recovery remains highly uncertain: an L-shaped, rather than V-shaped, trajectory cannot be ruled out. Released on 19 August, the current barometer reading of 84.5 is 15.5 points below the baseline value of 100 for the index and 18.6 points down from the same period last year. This reading – the lowest on record in data going back to 2007, and on par with the nadir of the 2008-09 financial crisis – is broadly consistent with WTO statistics issued in June, which estimated an 18.5% decline in merchandise trade in the second quarter of 2020 as compared to the same period last year. The exact extent of the fall in trade will only be confirmed later this year when official trade volume data for the period from April to June becomes available.
All of the barometer's component indices remain well below trend, with many registering historic lows, although some have begun to stabilize. Indices for automotive products (71.8) and air freight (76.5) are by far the worst on record since 2007. Container shipping (86.9) also remains deeply depressed.(1) Export orders (88.4) show signs of recovery as this index has turned upward. Meanwhile, indices for electronic components (92.8) and agricultural raw materials (92.5) have held up relatively well, showing only modest declines. The WTO's June statistics implied a 14% drop in global merchandise trade volume between the first and second quarters of this year. This estimate, together with the new Goods Trade Barometer reading, suggest that world trade in 2020 is evolving in line with the less pessimistic of the two scenarios outlined in the WTO's April forecast, which projected that the volume of merchandise trade this year would contract by 13% compared to 2019. However, as WTO economists warned in June, the heavy economic toll of the COVID-19 pandemic suggests that the projections for a strong, V-shaped trade rebound in 2021 may prove overly optimistic. (WTO)
Key Words: Global Trade, WTO, COVID-19
The clock is ticking on electronic advance data for trade and ecommerce in LDCs – Urgent digital transformation is needed to create safe and secure cross border ecommerce customs clearance in the world’s poorest countries. Over the last few months, COVID-19 lockdown restrictions around the world have had a dramatic impact on cross border ecommerce, including a reduction in the volumes of international parcels postal operators are managing. Ecommerce success globally had meant a flourishing of packages sent across borders, but coronavirus has caused a decline due to disruptions in transport capacity, the closure of borders and the impact the pandemic has had on consumer trust. Despite this, it is likely that global parcel supply chain infrastructure will be restored quickly by postal operators, transport companies and customs administrations. This recovery and the return to higher and higher levels of mailings will require urgent digital transformation, especially considering an upcoming deadline for electronic communications on items being sent globally by post. And, action is needed to ensure some countries aren’t left behind.
The regulatory landscape is changing rapidly - The COVID-19 pandemic is only one of the elements currently impacting the growth of cross border ecommerce. This year and 2021 will see huge changes in the regulatory landscape for the international exchange of low-value parcels and packets through the global postal network, supported mainly by designated postal operators of Universal Postal Union (UPU) member countries. UPU members work to facilitate communications and social and economic inclusion through the provision of a universal service.
Electronic advising ahead of the sending of postal items will be critical in meeting legal requirements taking effect in 2020/21, such as those established by the United States of America (Synthetics Trafficking and Overdose Prevention (STOP) Act), China, the Russian Federation and the European Union (Union Customs Code, Import Control System 2). Upcoming security requirements include sending pre-loading advance cargo information (PLACI) before an item leaves the country of origin, confirming the correct export processing to destination customs and transport airlines, and possibly sending security alerts back to the country of origin. (Trade4DevNews)
Key Words: Global Trade, Investment Policy, LDCs
PAN AFRICA
AfCFTA could boost Dubai-Africa trade by 10% over next 5 years – Dubai’s trade with Africa could see an annual increase of up to 10% over the next five years following the implementation of the African Continental Free Trade Agreement (AfCFTA), according to Dubai Chamber of Commerce and Industry’s latest forecast. The outlook for Dubai-Africa trade and new bilateral business opportunities created by AfCFTA were among the main topics covered during a recent webinar organised by Dubai Chamber’s representative offices in Africa. The virtual event, held in cooperation with Dubai International Financial Centre (DIFC) and ABSA Group, was attended by 340 businesspeople from the UAE, Africa and other markets, who represent a wide variety of economic sectors and fields. A presentation from Dubai Chamber’s Economic Research Department noted that changing dynamics brought forth by AfCFTA and the Covid-19 situation have created an opportunity for businesses in Dubai to re-position themselves and explore new African markets as they prepare for recovery. AfCFTA, set to officially launch in January 2021, is expected to unlock new business prospects across Africa, with logistics, cold storage and warehousing, manufacturing, agribusiness, infrastructure, healthcare and pharmaceuticals, and technology, identified as key sectors and areas where which Dubai businesses can tap into new opportunities.
Dubai’s trade with Africa has increased significantly over the last 5years, registering a compound annual growth rate (CAGR) of 11%. Over the same period, imports from Africa increased by 14%, exports increased by 13% and re-exports by 6%. Bilateral non-oil trade reached nearly AED 1 trillion ($272 billion) over the 2011-2019 period. “AfCFTA will offer a huge opportunity for UAE investors who will be able to do business on a single set of trade and investment rules across the African continent. Dubai is well placed to benefit from the landmark trade agreement due to its status as a preferred re-export hub for African traders and strong presence of UAE companies in African markets and vice versa,” Omar Khan, Director of International Offices at Dubai Chamber said during his welcome remarks. (Ghana Web)
Key Words: Africa Trade, Dubai, AfCFTA
Africa trade and Covid‑19: The supply chain dimension – The economic crisis generated by the Covid‑19 pandemic is likely to be the deepest since records began. The International Monetary Fund projects a fall in global gross domestic product of 3% and the World Trade Organization (WTO) a drop in trade of between 13% and 32%. In Africa, trade volumes are projected to decrease by 8% for exports and about 16% for imports for 2020, compared with previous historic trend estimates (WTO, 2020a).Managing the pandemic has generated a unique blow to the world economy, simultaneously affecting supply, demand and trade. Supply has been affected directly through the suspension of operation of economic units across multiple activities. This has led to redundancies and suspensions, which have directly affected demand through dampening income expectations. The lockdowns have directly affected many services, such as hospitality and retail services, with a knock‑on effect on their domestic and foreign suppliers.In addition, restrictions applied on the movement of people and goods represent a huge hit to activities such as tourism and transportation. In the latter case, this has serious ramifications for many other activities that rely on the use of these services. Moreover, the actions (e.g. export restrictions) that third countries have adopted to increase the domestic supply of critical products (e.g. pharmaceuticals) have affected Africa’s ability to address the pandemic and the economic crisis.The crisis has had strong effects on Africa. The fall in commodity prices constitutes a significant blow to the trade and macroeconomic situation of many African countries that rely on few agricultural and mineral commodities. Meanwhile, the anticipated massive fall in income from tourism is going to hit many other countries that rely on tourism. Trade is also being affected, as Covid‑19 is increasing international trade costs through additional inspections, reduced hours of operation, road and border closures and increased transport costs. (ODI/ATPC)
Key Words: Africa,, Trade and Investment, COVID-19
Covid-19 impacts investors’ energy strategies in Africa – The price of oil and other commodities have plunged across the world in recent months as the combined effects of government-enforced Covid-19 lockdowns and a Saudi-Russia oil war triggered a devastating slump in demand and glut in supply. There is significant uncertainty over the future of major oil and gas projects around the world given the challenging global growth outlook, subdued economic activity in China, and fears of a looming worldwide recession. As a result, just 35% of those polled say that they are most likely to invest in oil and gas and just 22% in liquefied natural gas (LNG), two areas that remain critical to Africa’s energy mix today. Yet despite the decline in fossil fuels, participants remain attracted by the lure of renewable energy given the continent’s huge generation needs, with almost 90% saying they are most likely to invest in solar. 66% say they are most likely to invest in smart and off-grid energy solutions as investors increasingly bypass traditional state-owned power generation and distribution, while 48% are likely to invest in micro-grid solutions which can offer often inaccessible rural communities ready and reliable access to energy.
Investors expect Covid-19’s impact on the renewable sector to be muted, with 30% disagreeing that off-grid and mini-solar markets are in danger of collapse from the pandemic and 53% finding the proposition debatable (see Fig 5). With African energy investment turning gradually towards renewables, 56% say that is right that European and US organisations limit fossil fuels investments and financing. Nevertheless, 43% predict that Africa will only develop with an energy mix that involves fossil fuels. Given the outlook for renewables, investors say that Africa’s value proposition remains relatively strong, with 43% saying that it is better than other regions, 34% saying it is about the same and 24% saying it is better elsewhere (see Fig 7 – to view Figs 7-12 in a separate window, click here). 42% rank the continent’s landscape as very good and another 42% as good. They expect that the continent’s future as an attractive energy investment destination will be impacted by a complex mix of climate change, population growth, the aftermath of Covid-19 and political and security considerations. (African Business)
Key Words: Africa, COVID-19, Trade, Investment Policy
Agence Française de Développement and the African Export-Import Bank sign a EUR 150 million agreement aimed at promoting sustainable and climate finance in Africa- On July 2nd 2020, Agence Française de Développement (AFD) and the African Export-Import Bank (AfreximBank) have announced a new facility agreement for a EUR 150 Million financing program to support Afreximbank in the implementation of its new climate finance strategy which will target green, low carbon, socially inclusive and more resilient investments across Africa. As part of its financing program, AFD has made available a EUR 500,000 grant to carry out a technical assistance program which will support Afreximbank in developing its sustainable finance strategy. By doing so, this strong partnership between the two institutions will promote through Afreximbank and its partnering institutions, the dissemination of innovative financing mechanisms for the sustainable development of the African continent.
As the continent commence the implementation of the African Continental Free Trade Agreement (AfCFTA) early next year, it is timely to unlock new funding arrangements to finance sustainable projects and sectors that build Africa’s long-term competitiveness and resilience. It is estimated that the climate change is impacting negatively on Africa’s GDP by 2.8% every year (around USD 100 billion). In order to tackle the climate change challenges in Africa, financing solutions have to be developed not only through external financial flows but also through the development of specific and more appropriate instruments that fosters sustainable development. To this end, making financing available for climate finance and sustainable development in Africa is considered a priority by both institutions.
Against this backdrop, accelerating investments in key channels for climate and pandemic resilience in the continent is a top priority for Afreximbank: ensure food security by strengthening agricultural value chains, increase access to water and sanitation, improvement of living conditions of people, job creation through investments in resilient infrastructure, ensure the availability of affordable and sustainable source of energy for all, support the creation of world class medical facilities and pharmaceutical industries, are some of the main development challenges to tackle ahead. The new partnership signed on July 2nd, 2020, between AFD and Afreximbank aims at contributing to the development of such solutions. The agreements were signed by the Executive Vice-President of the African Export-Import Bank, Mr. Amr Kamel, with Dr. Fabio Grazi, Director of AFD Country Office for Egypt. (Afrexim Bank)
Key Words: Africa, COVID-19, Trade
AUDA-NEPAD launches the MSME Academy for all Africa’s Micro Small and Medium Enterprises – AUDA-NEPAD (the African Union Development Agency) has announced the launch of the MSME Academy, in partnership with Ecobank Group. Spearheaded under the AUDA-NEPAD “100,000 MSMEs by 2021” (100K MSMEs) programme for Africa’s Micro Small and Medium Enterprises, the Academy provides easy access to practical training and resources on financing opportunities in various countries, the how in building digital presence for businesses and how to adapt business operations in the era of the COVID-19 pandemic. The platform will also provide access to market intelligence, a host of mentors with diverse experience, while assisting with access to funding opportunities. The MSME Academy has three components:
- an informational webinar with invited speakers,
- a series of virtual instructor-led training programmes
- and mentorship for the MSMEs.
The Academy has country specific content with world-class pan-African design to ensure the right balance between local realities (challenges and opportunities of the MSMEs) with a structured pan-African approach for the sustainability and scalability of the initiatives. AUDA-NEPAD Chief Executive Officer Dr Ibrahim Assane Mayaki declared: “In this continent where the majority of the countries are low income and middle-income economies, where youth account for almost 60% of all of Africa's unemployed, the contribution of MSMEs and informal enterprises to the GDP growth and employment creation is fundamental. As the continent faces the socio-economic uncertainties brought about by the outbreak of COVID-19, the AUDA-NEPAD MSME Academy which is delivered in partnership with Ecobank, aims to foster resilience and the survival of MSMEs' in these critical times.”
Ade Ayeyemi, Ecobank Group CEO, commented: “The impact of COVID-19 continues to be felt across Africa with serious challenges and uncertainties for our MSMEs. The MSME Academy comes at an appropriate time to provide the right level of support to this vulnerable and important business segment in Africa. We have leveraged on the expertise of our globally recognised Ecobank Academy to develop country specific content tailored to MSMEs in Africa and therefore encourage MSMEs to register and participate in the various available virtual training programmes. “ Africa’s Micro Small and Medium Enterprises are invited to join the informational webinars to learn about tips on access to finance and inbuilding digital presence from speakers. Registration for the MSME Academy can be done here: https://msmeacademy.nepad.org/. (NEPAD)
Words: NEPAD, AfCFTA, Regional Integration
EAST AFRICA
Ugandan ecommerce platforms power recovery from COVID-19 crisis – According to the World Bank, Uganda’s real GDP growth in 2020 is projected to hover below 2% compared with almost 5.6% in 2019, due to COVID-19. As part of its response to the pandemic’s economic fallout, the Ugandan government is at the forefront of promoting ecommerce and digital solutions for faster recovery from the crisis. For instance, it has worked with mobile phone operators to reduce fees for digital services and offer complementary internet data packages to consumers to facilitate cashless transactions. It’s also using digital media to disseminate health messages and fight misinformation. Besides, the government is strengthening public-private sector cooperation to improve trade logistics and enhance the supply of digital services, in line with UNCTAD’s recommendations. Ugandan authorities are also bolstering entrepreneurship by supporting innovation and start-up-driven solutions. Further, the country has boosted internet connectivity by extending infrastructure that has enabled firms to lower the costs of their services. Uganda is also improving trust in online transactions. Last year, it enacted a data protection and privacy law to enhance the security of these transactions. An e-payments law recently approved by the country’s parliament is expected to come into effect soon to level the playing field for providers. In addition, Uganda plans to develop a national ecommerce strategy with support from the United Nations Development Programme (UNDP). “We’re banking on ecommerce to catalyse innovation, growth and social prosperity in the digital economy,” said Minister of Trade, Industry and Cooperatives Amelia Kyambadde. (Trade4DevNews)
Key Words: East Africa, Trade, Regional Integration
WCO conducts a virtual AEO training workshop for Seychelles Revenue Commission (SRC) - The WCO held a virtual Authorized Economic Operator (AEO) training workshop for The Seychelles Revenue Commission (SRC) from 20th to 23rd July, 2020. The workshop was made possible through the WCO-Finland ESA Project II with the financial support from the Ministry of Foreign Affairs of Finland. The key objective of this workshop was to support SRC to build their capacity towards the implementation of an AEO Programme in line with the provisions of the SAFE Framework of Standards and Article 7.7 of the WTO Trade Facilitation Agreement (TFA). The SRC participants gained an understanding of the three pillars of the SAFE Framework of Standards, criteria and requirements for an AEO scheme, AEO benefits, and the process of validation and authorization of economic operators adopting a whole supply chain approach. In addition, detailed discussions were held with regard to future steps for the development of an AEO Programme for SRC including establishing a project team, consulting with stakeholders, establishing a legal basis, framing of criteria, requirements and validation process, conducting of a pilot, and drawing up an implementation plan with key deliverables and timelines. Going forward, based on the further need of SRC, a follow up workshop will be planned to further support SRC officers together with stakeholders from the business community and partner government agencies. “For more information please contact capacity.building@wcoomd.org” (WCO)
Key Words: East Africa, Trade, WCO
WEST AFRICA
Ghana should not be a spectator in AfCFTA - Business Devt Minister – Following President Nana Addo Dankwa Akufo-Addo’s handing over of the African Continental Free Trade (AfCFTA) Secretariat to the African Union on Monday, August 17, 2020, Business Development Minister, Dr Mohammed Awal, has urged businesses not to sit aloof without partaking in the free trade which kicks off in January 2021. Speaking at the launch of Young Women in Entrepreneurship Wednesday, August 19, 2020, the Minister asked all Ghanaian businesses to take advantage of the free trade that will rake in over 3 trillion dollars as annual revenue. Dr Awal indicated that “Only Monday, President Akufo-Addo commissioned AfCTFTA Secretariat and handed over to A.U. the African Continental project has 1.2 billion people with 3.3 trillion dollar annual revenues. Ghana should not be a spectator in AfCFTA. Ghana should prepare its people and take advantage of the continental free trade business that’s going to rake in 3.3 billion”.
The Secretariat will run the free trade agreement to create a single market across member countries with a total population of 1.2 billion. The African Continental Free Trade also seeks to allow free movement of business travellers and investments. Meanwhile, Chairperson of the African Union Commission (AUC), Moussa Faki Mahamat has lauded President Nana Addo Dankwa Akufo-Addo for providing financial resources to ensure that the AfCFTA Secretariat was established in Ghana. (Ghana Web)
Key Words: AU, Regional Integration, AfCFTA
SOUTHERN AFRICA
Mauritius oil spill puts spotlight on ship pollution – Often close to world shipping lanes, small island and coastal nations are at particular risk from oil spills. Reliant on the marine environment and its biodiversity for tourism, fishing and aquaculture, islanders face an existential threat when oil spills happen in their waters. This is why the environmental crisis unfolding in Mauritius is of grave concern. It also brings into focus the international legal framework in place to provide support when ship-source environmental disasters strike, a new UNCTAD article says. The seas and their use are governed by several international conventions. But some are not ratified by all countries that might benefit, and others are yet to enter into force. This creates murky waters when oil spills happen, as not all parties have the same liability and compensation recourse, depending on which kinds of ships are responsible for the pollution and whether they have signed up to existing conventions. “There’s a need for universal participation in the existing international legal framework, where all nations are party to agreements, so when incidents like this occur, vulnerable countries are protected,” said Shamika N. Sirimanne, UNCTAD’s technology and logistics director. She said such oil spills herald negative environmental and socio-economic consequences for developing countries, especially small island developing states (SIDS). Ms. Sirimanne added: “Sustainable Development Goal 14 calls on us to protect life below water and this means minimizing pollution at every possible turn, including putting all necessary precautions in place to manage environmental disasters like oil spills when they do happen.” (UNCTAD)
Key Words: East Africa, Trade, UNCTAD
The 26th ICSOE to address COVID-19 challenges and discuss Policies for Private Sector led Growth in Southern Africa – A Consultative Meeting of the Bureau of the 25th Intergovernmental Committee of Senior Officials and Experts (ICSOE) of Southern Africa took place on 17th August 2020 and reconfirmed that the 26th ICSOE’s theme will be, “Policies and Strategies towards Effective Private Sector led Growth and Job Creation”. This will build on the work that has been accomplished by the two past ICSOE’s which focused on supporting the industrialization process in Southern Africa.
The ICSOE is a United Nations (UN) General Assembly policy sub-organ of the UN Economic Commission of Africa (ECA) Conference of African Ministers of Finance, Planning and Economic Development established to provide a Forum for engaging member States’ senior policy makers and experts on policy and programme-related matters in each of the five (5) sub regions of Africa. It is an integral part of ECA’s governance machinery and meets annually to consider, provide guidance and endorse the overall formulation and implementation of the Sub Regional Office (SRO’s) programme of work. Tuesday’s consultative meeting was attended by members of the Bureau of the 25th ICSOE of Southern Africa; Eswatini (Chair), Lesotho (Vice Chair) and Malawi (Rapporteur), representatives of the Southern Africa Development Community (SADC) and Common Market for East and Southern Africa (COMESA) and staff of the Sub-Region Office for Southern Africa (SRO-SA).
The meeting was officially opened by Mr. Mluleki Sakhile Dlamini, Director – MSME, Ministry of Commerce, Industry and Trade, representing the Government of the Kingdom of Eswatini, Chair of the Bureau who emphasized that, “this meeting was a great opportunity for the Bureau, SADC, COMESA and the Secretariat to review progress in the implementation of the approved work programme, introspect on the technical support to member States and regional economic communities and reflect more intensely on emerging regional challenges and opportunities.” He highlighted that the COVID-19 pandemic and industrialization as being major issues providing a framework for supporting development in Southern Africa. He pointed out that the pandemic had derailed planned development programmes and exposed structural frailties of the Southern African region, “including the dangers of narrow commodity dependence and the weaknesses of supply chains and this will invariably undermine regional economic growth which was expected to contract by about 4.5 percent this year.” (UNECA)
Key Words: UNECA, 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
