IMPORTANT ANNOUNCEMENT

Launch of the Online Readiness Assessment Guide for Cross-border Paperless Trade- Launch event is Friday 9 December 2020, 9 am Geneva time- The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), in collaboration with the United Nations Commission on International Trade Law (UNCITRAL), have developed an online platform to facilitate cross-border paperless trade readiness self-assessments. The interactive guide is designed to support countries to conduct self-assessments of legal and technical readiness on cross-border paperless trade. The new tool is relevant to all countries globally, as it can support the implementation of not only the Framework Agreement on Facilitation of Cross-Border Paperless Trade in Asia and the Pacific (CBFA), but also the full digital implementation of the World Trade Organization (WTO) Trade Facilitation Agreement (TFA). The first version of the online guide, to be launched and discussed during this event, is available at Readiness Assessment Guide for Cross-border Paperless Trade. If you would like to participate, please register HERE.

Today’s Topics

One month to start trading under AfCFTA, where does Africa stand?- (The New Times)

The promise of the African Continental Free Trade Area (AfCFTA)- (ecdpm)

Figure of the week: Socioeconomic impacts of COVID-19 in Ethiopia, Malawi, Nigeria, and Uganda- (Brookings)

President’s Remarks at the 5th Annual Meeting of the Africa Economic Zones Organization (AEZO) December 3, 2020- (africanews.)

Local currency financing for off-grid energy solutions in Africa limited, needs scaling up – (African Development Bank)

AU holds AfCFTA Extraordinary Summit- (SAnews.gov.za)

President Felix Tshisekedi Warms Up For AU Chairperson- (Taarifa)

Morocco reiterates full support for African free trade area- (The North Africa Post)

Tanzania pays attention to Angola’s railway link- (The Citizen)

Our AfCFTA goals will fail without private sector inclusion- (Ghana Web)

No significant reduction in cargo traffic at ports – GPHA boss- (Ghanaian Times)

Africa’s post-Covid recovery provides major opportunities for South African aviation sector- (Engineering News)

Economist predicts full economic recovery in 2022- (Daily News Botswana)

INTERNATIONAL

Improve productive capacities in the world’s poorest countries for stronger recovery, UNCTAD says-  Efforts to rebuild the economies of the world’s poorest nations post-pandemic will fall significantly short unless their productive capacities are drastically improved, according to UNCTAD’s Least Developed Countries Report 2020. Least developed countries (LDCs) with the most developed productive capacities have best been able to combat the fallout from the pandemic, according to the report. Productive capacities are the productive resources, entrepreneurial capabilities and production linkages that together determine the capacity of a country to produce goods and services and 3 enable it to grow and develop. “The pandemic has brutally reminded us of the urgent need to develop productive capacities in LDCs to enable them to achieve structural transformation, reduce exposure to external shocks and build resilience,” UNCTAD Secretary-General Mukhisa Kituyi said. He said the development of productive capacities in most LDCs has been too slow for them to overcome major development challenges and shocks such as COVID-19. UNCTAD’s Productive Capacities Index (PCI) shows that the majority of LDCs have low productive capacities: their average PCI level was 40% below that of other (non-LDC) developing countries between 2011 and 2018.  (UNCTAD)

Key Words: UNCTAD, COVID-19, Trade

“Pressing needs for a breakthrough” in WTO farm trade talks – Extract Speech- The WTO’s Agreement on Agriculture remains the only instrument that exists at the international level to govern global trade in agricultural products.   Since its entry into force, world exports of agricultural products have tripled from USD 450 billion to USD 1.5 trillion. The Agreement has during this last quarter century played a vitally important role in facilitating the flow of food from the lands of the plenty to the countries that would otherwise be lands of food deficit.  It is a mutually beneficial system that improves the lives of billions of people. The WTO Agriculture Agreement's role in ensuring orderly trade relations, and in levelling the playing field, is unique.  While many of us would like to see its provisions strengthened, and indeed they should be, we should not forget where we started and what has been achieved.    The world looked very different back in 1994, just prior to the entry into force of the WTO Agreement on Agriculture.  World trade in agricultural products was distorted and disorderly.  Many countries applied a wide range of unpredictable barriers to agricultural imports.  Through a “tariffication” process, quantitative restrictions, variable levies, import bans and other non-tariff measures that had been widespread elements of agricultural protection at national frontiers were replaced with import duties.  Tariff reductions then took place.  Similarly, world agricultural subsidy levels were sky high.  These subsidies were leading to a crowding out of the agricultural exports of many WTO Members who had neither the desire nor capacity to match these trade-distorting measures. The Agreement on Agriculture brought an orderly classification of agricultural subsidies based on their degree of trade-distortion.  And while the most distortive subsidies were reduced, through a Green Box of permissible subsidies, Members were granted the right to pursue food security, regional development, environmental policy and other goals.    (WTO)

Key Words: WTO, Trade, Africa

PAN AFRICA

One month to start trading under AfCFTA, where does Africa stand?-  With trading under the African Continental Free Trade Area (AfCFTA) agreement, expected to start January 1, 2021, officials and experts say, a lot of ground as regards outstanding negotiations and readying prerequisites to make things work has been covered. The negotiators are still busy trying to wrap up before the beginning of trade. Trading under the AfCFTA was due to commence on July 1, 2020. But due to the Covid-19 global pandemic, it was postponed. This gave countries some more time to patch up unfinished work. The negotiations proceeded using online platforms. An Extraordinary AU Summit to be held on Saturday, December 5 “is expected to approve all required instruments to start trading” under the AfCFTA on January 1, the Minister for Trade and Industry, Soraya Hakuziyaremye, told The New Times. “As Rwanda, we are very much looking forward to this milestone, two years and eight months after the signature of the AfCFTA agreement in Kigali,” she said. “Despite Covid-19, the EAC has been able to conclude the first set of negotiations to allow the Customs Union to submit its schedule of tariff concessions before the Summit. This was approved on Wednesday (December 2) at the EAC Sectoral Council on Trade Industry Finance and Investments.” Prudence Sebahizi, Chief Technical Advisor on AfCFTA at the AU Commission, told The New Times that “much progress has been made” to ensure that trading starts on January 1. Sebahizi said: “Member States have been able to conclude outstanding negotiations on rules of origin to the level above 80% and tariff offers have been submitted to allow trade in goods to start. (The New Times)

Key Words: AfCFTA, Trade, Africa

Local currency financing for off-grid energy solutions in Africa limited, needs scaling up - African Development Bank report-Although advantageous, local currency financing for off-grid renewables projects and businesses in Africa is still limited, according to a new report released by the African Development Bank. The report, Exploring the Role of Guarantee Products in Supporting Local Currency Financing of Sustainable Off-Grid Energy Projects in Africa, summarized findings of an in-depth study of documents on the off-grid energy and local currency financing sector, as well as interviews of energy stakeholders in the commercial and industrial and mini-grid sectors in Ghana, Kenya, Nigeria, and Tunisia. Companies that invest in off-grid renewable energy solutions in Africa grapple with limited access to credit as a result of risk profiling that is of concern to providers of local debt financing. Where credits are offered, the interest rates can be extremely high. There are potential advantages in using local currency debt financing for off-grid renewables projects and businesses to mitigate foreign exchange (FX) risks in the African continent. With the emergence of leasing and solar-as-a-service providers, there is the need for credit enhancement products to assess the availability of local currency finance for sustainable energy projects in Africa and the obstacles developers face in tapping into local financial and capital markets. “Engaging with local currency markets to provide access to long-term local currency funding will allow borrowers to reduce currency and interest rate risks,” Dr. Daniel Schroth, Acting Director for Renewable Energy and Energy Efficiency, said in opening remarks made at the virtual launch of the report on 25 November. Countries are facing the dual objective of increasing the availability of energy to households and businesses while decreasing the dependency on fossil fuels by adopting renewable or low carbon technologies. However, local currency finance providers have limited appetite for investing in the commercial and industrial sector, other than through traditional on-balance sheet corporate lending to established players, the report reveals. (AfDB)

Key Words: AfDB, Business, Africa

President’s Remarks at the 5th Annual Meeting of the Africa Economic Zones Organization (AEZO) December 3, 2020 – Africa has had impressive economic growth over the past one decade, including 6 of the ten fastest growing economies in the world. While the pandemic has set us back now, with a decade of growth lost, I am confident that Africa will bounce back. The same fundamentals that drove growth are still there. At the core of this must be the growth of the private sector, and the deployment of supportive environments for their operations. Globally, Special Economic Zones have powered the economic growth of several countries. Their numbers have exploded from less than 200 in the 1980s to 5,000 today. Collectively, they have contributed exports worth $3.5 trillion, roughly 20% of global trade in goods. In Africa, special economic zones are operating in 38 countries, accounting for annual trade turnover of $680 million. The Special Economic Zones have not been as successful in Africa compared to Asia and other parts of the world, for several reasons. First, is the more limited infrastructure, with Africa’s infrastructure financing gap estimated to be $64-108 billion annually. Second, is the weaker institutional environment and coordination challenges. Third, is the limited access to financing to develop well-integrated value chains. Fourth, the primary focus of the Special Economic Zones on exports alone has weakened the linkages with the wider local economy, with very limited transfer of skills, technology and market access. Essentially, they often create islands of wealth in the midst of wider poverty.  (africanews.)

Key Words: Africa, Business, Regional Integration

Figure of the week: Socioeconomic impacts of COVID-19 in Ethiopia, Malawi, Nigeria, and Uganda – lthough most African countries have, to date, been largely successful in fighting the spread of COVID-19, with far fewer reported cases and deaths from the disease than Europe, Asia, or the Americas, the pandemic has still had substantial socioeconomic impacts on African citizens. Policy measures to limit the spread of the disease, such as travel restrictions, lockdowns, and school closures—while both necessary and effective at limiting health impacts—have slowed economic activity worldwide. As a result of the health and economic effects of the pandemic, up to 49 million more Africans could be pushed into extreme poverty in 2020. To study the potential socioeconomic impacts of COVID-19 on African countries, the World Bank published a working paper, “Socioeconomic Impacts of COVID-19 in Four African Countries,” in early November. The paper analyzes data from a series of phone surveys undertaken every month since May 2020 with a national sample of households in Ethiopia, Malawi, Nigeria, and Uganda. Figure 1 shows the percentage of households that have lost income from five sources—farm income, business income, wage income, remittances, and all other sources—in rural and urban areas of each of the four countries. According to the paper, income losses have been particularly severe in Malawi, Nigeria, and Uganda, where a majority of households that relied on income from any of the five sources over the past 12 months have lost income due to the pandemic. These trends were also found in earlier analyses of World Bank survey data from Nigeria. (Brookings)

Key Words: Africa, COVID-19, AfCFTA

AU holds AfCFTA Extraordinary Summit - The African Union will this weekend host the African Continental Free Trade Area (AfCFTA) Extraordinary Summit, in preparation for the start of the AfCFTA on 1 January. Cabinet, in a statement following its meeting this week, said the AfCFTA holds “enormous benefits” for South Africa as it serves as a “catalyst to economic growth and investment”. “The free-trade area opens our exports of goods and services to a market of more than 1.2 billion people. As Chair of the AU, South Africa has been at the forefront of driving the implementation of the AfCFTA,” reads the statement. Cabinet reiterated that the agreement advances economic integration and development, women empowerment on the continent, and strengthens efforts towards peace and stability in Africa.

Reconciliation Day - In the same meeting, Cabinet resolved that this year’s Reconciliation Day, 16 December 2020, will be under the theme: “United in Action against Racism, Gender-Based Violence and Other Intolerances”. In the statement, Cabinet said the country should use this day to recommit itself towards achieving nation-building and social cohesion. “This year’s focus on racism underscores the importance of each person taking responsibility to fight racism, racial discrimination, xenophobia and related intolerance in the country,” said Cabinet. (SAnews.gov.za)

Key Words: Africa, Aviation Industry, Regional Integration

The promise of the African Continental Free Trade Area (AfCFTA) –- Trading under the African Continental Free Trade Area (AfCFTA) is set to begin on 1 January 2021. So far more than 30 countries have ratified the Agreement, which aims to connect 55 countries, creating a market of 1.3 billion people. The hopes and aspirations attached to the AfCFTA – for trade, industrialisation and addressing the effects of COVID-19 – place it high on the agendas of African policymakers, but also of their partners who support the process. This paper provides an overview of some of the potential opportunities and benefits of the AfCFTA, particularly in relation to manufacturing, agriculture, services and e-commerce, but also of the challenges involved in moving from agreement to impact. The AfCFTA promises a virtuous circle of greater market opportunities, triggering more trade and investment, and allowing greater value addition and productivity growth – leading to more and better jobs with social inclusion, and thus further enlarged markets. But for the full benefits of the AfCFTA to accrue to African countries and citizens, numerous additional policy enablers – measures, reforms and investment – are also key, not least in infrastructure, transport corridors and logistics, as well as to improve the business climate in African countries.

Despite high-level political momentum around the AfCFTA, its ultimate success depends on African states not only ratifying, but fully implementing and complying with the AfCFTA, while also investing in the necessary enablers. As such, the political economy dynamics around the AfCFTA between and within countries and sectors are key to understanding how and where most impact will be felt, and therefore where and what kind of external support is necessary and useful. (ecdpm)

Key Words: AfCFTA, Africa, Regional Integration

President Felix Tshisekedi Warms Up For AU Chairperson- Moussa Faki, Mahamat the Chairperson of the African Union Commission flew to the DRC capital Kinshasa to meet President Felix Tshisekedi who is preparing to assume his new role as Chairperson of the AU in early 2021. Tshisekedi, received Moussa Faki on Thursday at the Palais de la nation where both held discussions over several issues and especially the forthcoming extraordinary virtual summit on the continental economic free trade zone (CFTA). The AU Commission chairperson Moussa Faki indicated that, on December 5, President Tshisekedi, in his capacity as 1st Vice-President in office of the African Union, will participate in a virtual extraordinary summit on the Continental Economic Free Trade Zone (CFTA) under the theme “Silence the guns”. Moussa Faki confirmed President Tshisekedi  will assume the functions of head of the African Union during the Ordinary General Assembly in early February 2021 in Addis Ababa. He noted that this was part of the reasons he flew to Kinshasa to meet President Tshisekedi -the preparation for this assumption of functions was the subject of their discussions. (Taarifa)

Key Words: AU, Africa, Regional Integration

NORTH AFRICA

Morocco reiterates full support for African free trade area- Morocco voiced its full support for the African Continental Free Trade Area (AfCFTA) as a lever of African integration and a development trigger, Minister delegate in charge of African affairs said. Morocco spares no effort to materialize the AfCTA on the ground, Mohcine Jazouli told an African Union meeting held by video conference. He recalled that King Mohammed VI had underscored Morocco’s commitment to promote an intra-African cooperation based on economic solidarity. In this respect, boosting intra-African trade would help promote integration, reinforce competitiveness, create jobs and give a push to African industrialization. Morocco signed the AfCFTA on March 21, 2018, in Kigali as it pushes ahead with an African policy based on win-win partnerships and African solidarity. (The North Africa Post)

Key Words: North Africa, Regional Integration, Trade

EAST AFRICA

Tanzania pays attention to Angola’s railway link - The government said yesterday that it was closely following up on reports that Angola was mulling the construction of a railway line that would connect it (Angola) to Tanzania via Zambia. The plan was to build a trans-African railway between the ports of Dar es Salaam in the east of the continent and Lobito in the west. Tanzania Railyway Corporation (TRC) Director General, Masanja Kadogosa told The Citizen yesterday that the government was paying a close eye to the issue. “We have not received anything official, but could be put forward to us though the Southern African Development Community (Sadc) directives or protocols,” he said. He said this a few days after the Angola Ambassador to Tanzania, Sandri De Oliveira Sandri, proposed the initiative on grounds that the railway corridor would connect the two countries through Zambia, allowing for the transit of goods from markets in America, Asia and Europe. “In order to have the railway link with Tanzania, the Angolan government would construct a new railway line into Zambia that would further link to the 1,860km Tanzania–Zambia Railway,” said the Ambassador. He added that Angola was counting on “Tanzania’s collaboration in this effort”. At present, Angola’s economy depends overwhelmingly on exports to China – in 2018 these accounted for more than $25 billion, more than its exports to the rest of the world combined, and consisted mainly of oil. There is almost no trade between Angola and Tanzania. In 2015, Tanzania exported less than $5m to Angola, and Angola less than $500,000 worth of goods to Tanzania. The lack of commercial contact is partly due to the difficulties in overland transport by road, especially in Zambia, during the rainy season. A rail link would provide each country with access to each other’s markets, as well as improved access to global buyers.  (The Citizen)

Key Words: EAC, Business, Regional Integration

WEST AFRICA

No significant reduction in cargo traffic at ports – GPHA boss – The Director-General of the Ghana Ports and Harbours Authority, Michael Lujuge has applauded efforts being made by the government to expedite processes leading up to the realisation of efficient multimodal linkages that would complement the ongoing massive developments in Ghana’s port infrastructure. Speaking on Eye on Port on the Status of Ghana’s Ports and their readiness for African Continental Free Trade Area (AfCFTA), the DG of GPHA, indicated that the success of every country’s port system was not only seen in the availability of world class port infrastructure, but also the overall efficiency in its hinterland transport systems. “Trade feeds on distance, time and cost. Connectivity is key. That is why the ideal situation is for you to have multimodal transport. That way, the trader is able to choose from these options the one that best suits him or her in terms of time and money,” he said. He said it was now more needed than ever for Ghana to step up efforts in developing its rail networks and also develop its inland water transport systems to open up opportunities for increased trade as Ghana intends to lead the way in intra-continental trade. Mr Luguje explained that with a well-oiled rail system in Ghana, the time and cost of carting goods through the hinterlands would be significantly reduced as well as the traffic congestion on the country’s road networks which would make the cost of doing business for importers and exporters cheaper. He cited the case of Tema Motorway interchange project which has seen phase 1 completed, where goods coming to and from the port are moving at a speedy rate which has relieved economic operators. (Ghanaian Times)

Key Words: West Africa, Trade, Economic Growth

Our AfCFTA goals will fail without private sector inclusion – Mr Robert Ahomka-Lindsay, Deputy Minister of Trade and Industry, says private sector participation is key to the country's quest to benefit from the Africa Continental Free Trade Area (AfCFTA) agreement. He said the government recognised the role of local entrepreneurs and was committed to supporting businesses succeed under the AfCFTA. The Minister, who was addressing a regional stakeholders conference in Ho on the trade agreement, said the continental free trade area held prospects for the business community. "Entrepreneurs must all be commended. It is not easy to set up and sustain a business throughout the years. It is a journey that needs the strength of character and focus. Our AfCETA journey would fail if the private sector does not take advantage. Many agencies are there to support you, so please be aware and don't be afraid to walk in and ask for support," he said. Mr Ahomka-Lindsay said the government had supported key financial institutions to provide the needed support. He said through the GRATIS Foundation, the government established technical solution centres across the country so small and medium enterprises (SMEs) could access the right equipment. He said the One District One Factory (1D1F) initiative was to enable the private sector to make the most of the nation's industrial prospects. The Minister said to strengthen the local economy, there was the need for the export of value-added products, and appealed to the private sector to consider the 17 exportable products identified and supported by the government. He said a National Export Development Strategy was developed to help transform the export economy and called for creativity to stay ahead of the free trade competition. "We must explore ways to increase creativity around product processing and packaging. Ghana is the eighth highest exporter on the Continent and a focus of the competition," Mr Ahomka Lindsay stated.(Ghana Web)

Key Words: West Africa, Economy, COVID-19

SOUTH AFRICA

Africa’s post-Covid recovery provides major opportunities for South African aviation sector - African recovery and return to economic growth following the Covid-19 pandemic presented a significant opportunity to the general aviation sector across the continent, but particularly in South Africa, SA Flyer editor Guy Leitch pointed out on Thursday. He was addressing the Commercial Aviation Association of Southern Africa’s virtual 2020 symposium. “South African general aviation is the single largest repository of aviation sector expertise in Africa,” he highlighted. “Intra-African connectivity is the big opportunity.” This opportunity was open to both the general and commercial aviation sectors. Even before the pandemic, both the commercial and general aviation sectors in Africa had faced a number of major challenges. The biggest single one was the lack of air transport liberalisation across the continent. But other major challenges included limited air traffic management services and inadequate airports. Symbolic of the constraints on African aviation was the fact that, in most African countries, the national aviation regulators employed more staff than there were pilots registered in those countries. The pandemic had severely disrupted the continent’s air transport links. Yet aviation was essential for Africa’s economic growth, because of the inadequacy of its terrestrial transport infrastructure (roads and railways). This opened opportunities for contract operations (such as flights to and from mines, for medical evacuation and, in the near future, Covid-19 vaccine distribution), VIP flights and charter operations. Further, the development of smaller single-aisle airliners, such as the Airbus A220-family and the Embraer EJet and EJet-E2 families, provided opportunities for African commercial aviation. These aircraft made previously uneconomic intracontinental routes commercially viable.  (Engineering News)

Key Words: SA, Economy, Trade

Economist predicts full economic recovery in 2022 - Although the Botswana economy is destined to bounce back next year, full recovery will only be realised in 2022. This was said by FNB chief economist, Mr Moatlhodi Sebabole during the virtual Youth Entrepreneurship Studio held Wednesday as part of De Beers Diamond Impact Week. Mr Sebabole, who was deliberating on the topic “Recovery and Growth”- Botswana and the Global Outlook from an Economist’s Perspective, said only in 2022 would the economy return to its 2019 size. Describing COVID-19 as a perfect storm in the world economy, he noted that it hit both the demand and supply sides and affected production of goods and services. He said the momentum had started to kick in because following lockdowns business activities resumed and confidence was restored. Mr Sebabole observed that some industries, such as pharmaceuticals, e-commerce and food production, performed significantly well during the COVID-19 era. He regretted the increase in power and fuel tariffs which increased operating costs for some businesses at a time when wages were either not keeping up with those increases or there was not much revenue. He also said revenue from the country’s mainstay,  minerals and tourism, dwindled. There was therefore need to find alternative revenue earners, but more importantly, ways to structurally diversify the economy,he said. Mr Sebabole said it was important to diversify the economy into certain sectors to earn new revenue and introduce a mix of tax collection. (Daily News Botswana)

Key Words: Botswana, Economy, Business

Zim targets AfCFTA market opportunities - Zimbabwe is scaling up efforts to take a strategic position in the exploitation of the 1,2 billion people African market that is set to be created by the African Continental Free Trade Area (AfCFTA). This was said by Foreign Affairs and International Trade Minister Dr Sibusiso Moyo during an extraordinary session of the executive council to discuss the AfCFTA, held virtually yesterday. As a key enabler in attaining an upper middle income economy by 2030, Zimbabwe has plans to boost the manufacturing industry and its export basket in terms of volume and variety. Under its economic revival strategy, the manufacturing industry has a critical role to play in satisfying the local and export markets. Addressing fellow African ministers responsible for trade during the session, Minister Moyo said: “We note the 1,2 billion people market that the AfCFTA is creating, which companies should exploit to derive benefits of economies of scale. “Rather than bemoaning the negative effects and threats arising from AfCFTA liberalisation, the private sector should see opportunities and take advantage of the AfCFTA preferential market access,” said Dr Moyo. Despite the adversities that included sanctions, droughts, Cyclone Idai, external debt and the Covid-19 pandemic, Zimbabwe was prepared to start trading under the AfCFTA in 2021 as scheduled. “We are confident that by then, Zimbabwe would have finalised its tariff offer for submission to the AUC hence our preparedness to take all necessary steps to fully participate in trading, both in goods and in services under the AfCFTA,” said Dr Moyo. He took time to explain to colleagues the steps Zimbabwe had taken in boosting the local industry and the economy in general. Zimbabwe had undertaken reforms aimed at promoting the ease of doing business by addressing regulatory bottlenecks and streamlining bureaucratic processes. “The country now has a one stop investment services centre under the Zimbabwe Investment and Development Agency (ZIDA), which works to consolidate and simplify processes.” (The Herald)

Key Words: Zimbabwe, Economy, Business