Current Trade News

Sub-Saharan Africa's economies will begin to recover from last year's coronavirus shock and grow again this year. But a predicted 3.4 percent growth rate will fall behind that of the rest of the world, says the International Monetary Fund (IMF).

In its six-monthly economic outlook for the region, published on Thursday, the agency attributes its expectation of a slow recovery to a slow delivery of vaccines to Africa and the lack of resources to stimulate economies.

"Many advanced economies have secured enough vaccine doses to cover their own populations many times over and are looking to the second half of the year with a renewed sense of hope," the IMF says.

"In Africa, however, with limited purchasing power and few options, many countries will be struggling to simply vaccinate their essential frontline workers this year, and few will achieve widespread availability before 2023."

Similarly, the agency says advanced economies are being helped to recover from the coronavirus pandemic by "trillions in fiscal stimulus and continued accommodation by central banks". But this is not an option in sub-Saharan Africa: "If anything, most entered the second wave [of the pandemic] with depleted fiscal and monetary buffers."

Increased exports, higher commodity prices and a recovery in private consumption and investment are expected to reverse last year's average contraction in the region's economies of 1.9 percent.

"However, per capita output is not expected to return to 2019 levels until after 2022 – in many countries, per capita incomes will not return to pre-crisis levels before 2025," the IMF predicts.

It adds that the region's low-income countries will need U.S. $245 billion between 2021 and 2025 to help recover lost ground, while the whole of sub-Saharan Africa will need $425 billion.

Looking back over the last year, the director of the IMF’s African Department Abebe Aemro Selassie said that although the contraction was not as bad as had been feared, 2020 was still the worst on record.

"The pandemic has had a devastating impact on the region’s economy," he said. "The number of extreme poor in sub-Saharan Africa is projected to have increased by more than 32 million. The 'learning loss' has been enormous, with students missing 67 days of instruction, more than four times the level in advanced economies."

Calling for more to be done to help defeat the virus in Africa, Selassie said in most countries the cost of vaccinating 60 percent of the population would need an increase in health spending of 50 percent.

"For the international community, ensuring vaccine coverage for sub-Saharan Africa is a global public good. Restrictions on the dissemination of vaccines or medical equipment should be avoided, multilateral facilities such as Covax should be fully funded, and excess doses in wealthy countries should be redistributed quickly."

The IMF nevertheless strikes a note of optimism in promoting previous prescriptions for future growth.

"Despite scarring from the crisis," the executive summary of the IMF outlook says, "sub-Saharan Africa’s potential is still undeniable, and the need for bold and transformative reforms is more urgent than ever – these include revenue mobilization, digitalization, trade integration, competition, transparency and governance, and climate-change mitigation."

Source: Allafrica.com

There is a huge shortfall in the investment needed to achieve the Sustainable Development Goals by 2030 and the private sector has a crucial role to play in plugging it.

Most discussions around achieving the UN’s Sustainable Development Goals (SDGs) focus on the strategies of governments and NGOs, for example asking how they can improve girls’ participation in education or expand measures to tackle greenhouse gas emissions.  

Yet with the private sector responsible for most global investment, business has also had a historic role to play in achieving the SDGs. Mechanisms are being put in place to spur private investment in sustainable projects and initiatives as corporations increasingly accept the link between “people, planet and profit”. 

There is a huge gap between the investment needed to achieve the SDGs by 2030 and the amount committed to date. According to the United Nations Conference on Trade and Development (UNCTAD), achieving the SDGs will require $3.9 trillion/year of public and private investment in developing countries alone, while the level currently stands at just $1.4 trillion/year.

The big challenge is tapping into the vast sums invested in capital and debt markets. Pension funds, insurance companies, sovereign wealth funds and bond markets collectively hold more than $120 trillion in assets. 

Cultural change, above all else, is required to persuade investors that it is in their own interests to target the goals, and there is increasing data to back up the assertion that sustainable investing is good for profits. For instance, UNCTAD research found companies that seek to address climate change enjoy 18% average higher returns on investment than those that do not. 

According to the Global Sustainable Investment Alliance, $30.7 trillion in assets under management currently target sustainable development. Yet although an increasing number of investment funds publicly support the SDGs, few provide comprehensive measurements and data to back up their methods.

All too often, such statements are used for marketing purposes rather than as concrete investment plans – an SDG form of “greenwashing”, where companies use environmental terms and slogans to promote green credentials, while clinging stubbornly to old business models.  

In September 2019, the UN Development Programme (UNDP) published a new set of standards for private equity fund managers seeking to support the SDGs. Developed by SDG Impact, a UNDP initiative, it seeks to mobilise another 5% of global assets under management, which equates to $6 trillion a year. Crucially, the detailed standards include measurements for determining the impact of investments, the kind of objective assessment that is badly needed. 

At the launch, SDG Impact director Elizabeth Boggs-Davidsen said: “Private sector enthusiasm for the SDGs is strong and growing but translating interest into action has been challenging. A big part of the SDG story is scale. We need to significantly speed up implementation to make progress by the goals’ target date of 2030.” 

Blended finance 

Companies can increasingly tap into development finance, philanthropic funds, development-focused private equity and in some cases public finance to develop projects that support the SDGs.

Blended finance instruments are one of the key emerging methods for attracting private sector investment into SDG-aligned projects, programmes and markets. Blended finance is defined as the strategic use of development finance for the mobilization of additional finance towards sustainable development in developing countries, while providing financial returns to investors. 

Blended finance has proved particularly popular in renewable energy, health and sustainable land use. The Organization for Economic Cooperation and Development (OECD), a club of rich world countries, has promoted the approach.

Development finance, which can be provided in the form of guarantees or direct investment, mobilized $205.2bn in private capital for development between 2012 and 2018. The trend has been steadily climbing upwards, with $49bn generated in 2018, yet much more is still required to bridge the SDG financing gap. 

The process can also encourage private companies to place their corporate social and environmental responsibility programmes at the heart of their operations rather than being treated as an unwanted obligation.

Gender equality 

Private sector investment can also help the SDGs to tackle poverty and hunger by creating good quality jobs. SDG 8: Decent Work and Economic Growth was specifically crafted with the goal of encouraging fair treatment for workers, a benefit not only to the employed but to investors who benefit from a more productive workforce.   

Private sector firms can create change by ensuring fair access to employment, training and opportunities for promotion to women and others who have been historically disadvantaged in the workplace. Workplace inequalities remain widespread in Africa. For every $1 earned by men in manufacturing, services and trade in Africa, women earn just 70 cents. Research by the UNDP released in 2018 found that only 22 countries in sub-Saharan Africa meet or exceed the International Labour Organization standard of 14 weeks’ paid maternity leave. 

Big corporations have a responsibility to take the lead by putting policies in place to change this. According to 2018 research by McKinsey, there are more than 400 African companies with revenue in excess of $1bn. However, many are currently failing to maximize the potential of their workforce. Ensuring equality of opportunity means that private companies can make the most of all the talents available to them.  

Project development 

Commercial changes are making it possible for the private sector to develop projects that directly help fulfil one or more of the goals. For instance, rapidly falling solar and wind power capital costs and rising turbine and solar module efficiencies have already made renewable energy more affordable than traditional fossil fuel-powered thermal power plants. 

The technologies have taken off most quickly in African countries where governments are prepared to offer support, such as South Africa, Egypt and Morocco. Falling costs are likely to trigger a renewable energy revolution across much of sub-Saharan Africa over the next decade in support of multiple SDGs, including Goal 7: Access to Affordable and Clean Energy; Goal 11: Sustainable Cities and Communities; Goal 12: Responsible Consumption and Production; and Goal 13: Climate Action. 

The examples of public and private initiative are numerous. French firm Urbasolar announced in March that it is developing a 30 MW solar plant near the town of Pâ in Burkina Faso, with all output supplied to the national power utility Société National d’Électricité du Burkina Faso (SONABEL). The Emerging Africa Infrastructure Fund (EAIF) has agreed to lend Urbasolar 80% of the €35.4m ($42.2m) development costs. 

Speaking at the time of the announcement, Paromita Chatterjee, an investment director at EAIF’s managers, Ninety-One, summed up the benefits of such projects for achieving the SDGs: “Harnessing Burkina Faso’s sunshine to improve its future prospects will bring many benefits to the country and make an important contribution to fighting global warming. This project is a perfect example of how EAIF’s public private partnership model can have lasting economic, social and environmental impacts while mobilizing private capital and enterprise to create new infrastructure.” 

Governments play a key role in enabling such investment by creating attractive investment environments and encouraging state-owned companies to support private sector developers.

 

Source: African Business.

Zimbabwe has so far raked in US$23,3 million from the sale of 9,5 million kg of tobacco in five days, a 152 percent improvement compared with last year's US$9,2 million from 3,9 million kg, statistics released by the Tobacco Industry and Marketing Board (TIMB) show.

An estimated 90 percent of the tobacco delivered came from the contract crop, with just 10 percent being sold on the auction floors.

Buyers offered a highest price of US$6,30 per kg at the contract floors, while the highest price at the auction floors remained at US$4,99 per kg.

In the same period last year, tobacco generated US$9,2 million from the sale of 3,9 million kg.

At this stage, 133 408 bales have been laid and 129 704 sold as compared with 54 060 laid during the corresponding period last year, with 52 705 bales sold during the same period last year.

The majority of farmers in the country are currently producing tobacco under contract farming.

The contract farming arrangement sees tobacco farmers being guaranteed a timely supply of inputs and, in some cases, funds to pay workers.

The farmers are given technical advice because the contractors want their crop grown according to market requirements.

Last year, production of the golden leaf reached 184 million kg. And this year TIMB has projected that production could reach 200 million kg due to the positive rainfalls.

The Herald.

New York and Nairobi — Last week Ministers of Finance met virtually at the Spring Meetings of the International Monetary Fund (IMF) and the World Bank to discuss policies to tackle the pandemic and socio-economic recovery.

But a global study just published by the Initiative for Policy Dialogue at Columbia University, international trade unions and civil society organizations, sounds an alert of an emerging austerity shock: Most governments are imposing budget cuts, precisely at a time when their citizens and economies are in greater need of public support.

Analysis of IMF fiscal projections shows that budget cuts are expected in 154 countries this year, and as many as 159 countries in 2022. This means that 6.6 billion people or 85% of the global population will be living under austerity conditions by next year, a trend likely to continue at least until 2025.

The high levels of expenditures needed to cope with the pandemic have left governments with growing fiscal deficit and debt. However, rather than exploring financing options to provide direly-needed support for socio-economic recovery, governments--advised by the IMF, the G20 and others--are opting for austerity.

The post-pandemic fiscal shock appears to be far more intense than the one that followed the global financial and economic crisis a decade ago. The average expenditure contraction in 2021 is estimated at 3.3% of GDP, which is nearly double the size of the previous crisis. More than 40 governments are forecasted to spend less than the (already low) pre-pandemic levels, with budgets 12% smaller on average in 2021-22 than those in 2018-19 before COVID-19, including countries with high developmental needs like Ecuador, Equatorial Guinea, Kiribati, Liberia, Libya, Republic of Congo, South Sudan, Yemen, Zambia and Zimbabwe.

The dangers of early and overly aggressive austerity are clear from the past decade of adjustment. From 2010 to 2019, billions of people were affected by reduced pensions and social security benefits; by lower subsidies, including for food, agricultural inputs and fuel; by wage bill cuts and caps, which hampered the delivery of public services like education, health, social work, water and public transport; by the rationalization and narrow-targeting of social protection programs so that only the poorest populations received smaller and smaller benefits, while most people were excluded; and by less employment security for workers, as labor regulations were dismantled. Many governments also introduced regressive taxes, like consumption taxes, which further lowered disposable household income. In many countries, public services were downsized or privatized, including health. Austerity proved to be a deadly policy. The weak state of public health systems--overburdened, underfunded and understaffed from a decade of austerity--aggravated health inequalities and made populations more vulnerable to COVID-19.

Today, it is imperative to watch out for austerity measures with negative social outcomes. After COVID-19's devastating impacts, austerity will only cause more unnecessary suffering and hardship.

Austerity is bad policy. There are, in fact, alternatives -even in the poorest countries. Instead of slashing spending, governments can and must explore financing options to increase public budgets.

First, governments can increase tax revenues on wealth, property, and corporate income, including on the financial sector that remains generally untaxed. For example, Bolivia, Mongolia and Zambia are financing universal pensions, child benefits and other schemes from mining and gas taxes; Brazil introduced a tax on financial transactions to expand social protection coverage.

Second, more than sixty governments have successfully restructured/reduced their debt obligations to free up resources for development. Third, addressing illicit financial flows such as tax evasion and money laundering is a huge opportunity to generate revenue. Fourth, governments can simply decide to reprioritize their spending, away from low social impact investments areas like defense and bank/corporate bailouts; for example, Costa Rica and Thailand redirected military expenditures to public health.

Fifth, another financing option is to use accumulated fiscal and foreign reserves in Central Banks. Sixth, attract greater transfers/development assistance or concessional loans. A seventh option is to adopt more accommodative macroeconomic frameworks. And eighth, governments can formalize workers in the informal economy with good contracts and wages, which increases the contribution pool and expands social protection coverage.

Expenditure and financing decisions that affect the lives of millions of people cannot be taken behind closed doors at the Ministry of Finance. All options should be carefully examined in an inclusive national social dialogue with representatives from trade unions, employers, civil society organizations and other relevant stakeholders.

#EndAusterity is a global campaign to stop austerity measures that have negative social impacts. Since 2020, more than 500 organizations and academics from 87 countries have called on the IMF and Ministries of Finance to immediately stop austerity, and instead prioritize policies that advance gender justice, reduce inequality, and put people and planet first.

Source: Allafrica.com

The UN Food and Agriculture Organization (FAO), together with the African Union (AU) Commission, launched a new continent-wide framework on Thursday, to boost trade and improve food security.

According to the UN agency, the initiative will help "unlock the potential" of the agricultural sector to contribute to sustainable and inclusive growth across the continent, and promote the African Continental Free Trade Area (AfCFTA) agreement that began in January, establishing the world's largest free trading area, in terms of countries participating.

"The framework provides a timely catalyst for the transformation to more efficient, inclusive, resilient and sustainable agrifood systems, sustainable development and prosperity in Africa", FAO Assistant Director-General Abebe Haile-Gabriel, AU Commissioner Josefa Sacko, and AfCFTA Secretary-General Wamkele Mene, said. in a joint statement.

"A key priority is the pursuit of industrial transformation policies and programmes that support the private sector to add value to African exports, compete with imports from outside Africa and expand opportunities for job creation", they added.

Benefits for all

FAO highlighted that the framework will help the national formulation of strategies, policies and programmes, which will not only promote intra-African trade but also develop agricultural value chains, so that all stakeholders - including farmers, agri-businesses, women and youth - can reap the benefits of the new trading bloc.

Formally known as the Framework for Boosting Intra-African Trade in Agricultural Commodities and Services, the initiative covers trade policy, facilitation, infrastructure and finance; productive capacity; market integration; and cross-cutting issues, such as market information systems.

Though African countries import about $80 billion worth of agricultural and food products annually. Only a small portion of that trade is within the continent, with intra-African agricultural trade is estimated to be less than 20 percent.

Source: Un News

Malawi government, through the Ministry of Trade, has defended its decision to export maize, claiming the move will not affect food security of the country.
Government has since started issuing maize export licences to allow the economy off-take excess stocks of maize from last year's harvest for export and to create storage for this year's harvest.
Secretary for Trade, Christina Zakeyo, claims that the exportation of maize will not affect the country's food situation, thanks to a projected bumper maize harvest for 2020/2021 farming season following the successful implementation of the Affordable Input Programme (AIP).
Zakeyo, therefore said the maize export licences will only be issued to exporters with proof of verifiable maize stocks from the previous agricultural season. "The licences to be granted will have a validity of three months from the date of issue.
"The exporter will be required to undertake a commitment to inform the Ministry about the export proceeds received after 180 days from the date of export," said Zakeyo. Under the Control of Goods Act of 2018, maize is a controlled commodity and the export of which requires a licence.
Traders intending to export maize will have to submit applications for the licence to the Ministry with the following supporting information--physical address of the business and warehouse where the maize is stocked; business registration certificate or certificate of incorporation; business residence permit or permanent resident permit for non-Malawians; identification document and a letter of authority to export from the Ministry of Agriculture stating source of maize, quantity and destination country.
In February this year, Minister of Agriculture, Lobin Lowe disclosed that this year's maize harvest projection is at 4 million metric tones. Lowe equally attributed this to AIP as well as good rains this country is receiving.
He also said government has already sourced 150 thousand metric tons of fertilizer for the next AIP. According to him, government wants to roll out the program for the 2021/22 farming season in good time.
Lowe claimed that currently the ministry is ironing out problems that affected the program in the 2020/2021 rainy season.
Allafrica.com