Current Trade News

29 / 07 / 2020 - Africa: Small Businesses in Africa Must Innovate to Survive Covid-19

Dorothy Tembo is the acting Executive Director of the International Trade Centre, (ITC) a joint agency of the United Nations and the World Trade Organization. In June, the ITC launched a report titled "COVID-19: The Great Lockdown and its Impact on Small Business." In an interview with Kingsley Ighobor, Ms. Tembo discusses the report, the role of women and youth in post-pandemic recovery in Africa, among other topics. These are excerpts from the interview.
What key messages does your newly released report on COVID-19 and micro, small and medium-sized enterprises (MSMEs) convey?
The first is that MSMEs matter, and they must be at the center of any post-pandemic recovery effort. Second, there is a disruption of the global supplies that these MSMEs are a part of. The third message is that, going forward, we need to think carefully about how we support MSMEs, making sure we push in a direction of more resilient value chains that can withstand disruptions in the future.
The report states that MSMEs, especially in poor countries, are disproportionately affected by the pandemic. Why is this the case?
Poor countries face huge economic challenges. The pandemic compounded an already bad situation. For years, these countries have cried out for assistance to build infrastructure that supports economic development. In these countries, businesses are relatively small and cannot access finance. Some of these countries are landlocked and therefore the cost of doing business is much higher than in the others.
The Africa Union's Silencing the Guns 2020 campaign, if successful, could strengthen countries' resilience in recovery. Is that correct?
Absolutely. If we could have a situation where peace reigns in countries, that would be an opportunity to consolidate development efforts.
Your report paints a gloomy picture of the situation of MSMEs in Africa. For example, one in five small firms would be bankrupt within five months and $2.4 billion worth of exports is expected to be lost this year. Any good news at all?
You're right. We should not underestimate the impact of COVID-19 on countries. But I think there is a glimmer of hope. The current situation presents an opportunity to reflect on what to do going forward to enable MSMEs become more resilient. There are potential opportunities.
First is the possibility for countries and companies to start innovating, because small enterprises tend to be agile and able to adapt. For example, some companies we are working with are able to conduct e-commerce and have survived. So, innovation is a possibility in terms of existing value chains or in doing something completely new.
Second, we have an opportunity to rethink how we develop more resilient value chains that can accommodate future difficult situations.
Third is to explore more sustainable production options that, in the long term, are cheaper and environmentally friendly.
The final point is, there is an opportunity for countries to consider their product range. Many countries depend on a single or a few commodities. They could now look at a broader product range as well as diversification of markets. Africa can look at the opportunities that come with the African Continental Free Trade Area (AFCFTA) in terms of value add, within the continent, even as countries look at the global markets.
Many people believe that African youth can capably lead the innovation charge. What are your views on this?
I agree. This is something we have observed from our work with young people in Africa. If you look at some of the sectors where the shift has occurred, the digital side of things for example, it's the youth who are involved, and they are pushing the trend and showing their ability.
Also, the youth tend to think outside the box and can reposition themselves quickly. We must give them priority. They are the future and we cannot leave them behind.
Your report offers a 15-point plan of action. How do you ensure that your recommendations are implemented by the MSMEs, the business support organizations and the various governments?
The action plan provides some guidelines in terms of what the three stakeholder groups should be looking at, that is the immediate steps they can take. These guidelines were drawn from our engagement with different companies in different countries. And the guidelines speak to the core issues that are affecting these countries.
Countries see the relevance of what we're doing. They want to address the challenges they are facing. The ITC and others ensure that when countries decide to implement our recommendations, that we work with them to provide the necessary technical assistance or any required handholding.
Women constitute a huge percentage of Africans engaged in informal trade. Given that women are disproportionately affected by COVID-19, is it reasonable to suggest that they be given priority in any recovery assistance?
Absolutely, and not only because of COVID-19. Women's economic participation has been very limited. In most cases, women are not very engaged or allowed to participate in business. Even when they can participate, they're likely workers and when they own a business, they are small operations that cannot grow because of various reasons.
Women's businesses are likely to be closed as a result of the pandemic; therefore, any form of financial assistance to companies must consider the plight of women or be viewed through the gender lens. The ITC has designed a women's empowerment programme called SheTrades under which we aim to connect three million women to markets. Even now, women are unable to get the necessary information to access the resources being provided within the COVID-19 context.
Somebody told me a very interesting story about a border in southern Africa. At that border, two lines were formed: one for males and another line for females. The line for the males was cleared ahead of the one for the females. By the time the line for women was cleared, the men had been in the markets for hours and had sold their goods. These may appear simple, but they do have a huge impact on how business is conducted and how opportunity is lost.
What is the timeframe for connecting three million women to the market?
Our commitment is that by 2021 we will have connected three million women to the market. We have already gone beyond half of that number.
Given the disruptive impact of COVID-19, can you still meet the 2021 target?
I believe we can. For the simple reason that the demand to meet the Sustainable Development Goals (SDGs) is even higher now than before. I remain optimistic. We will keep pushing ourselves, understanding the challenges that we face.
How do you connect the women to the market?
We have identified some core issues that make women uncompetitive in business. One is a lack of access to finance. You still have some countries asking women for their husband's approval before accessing a loan. And interest rates for loans are too high and unaffordable.
Also, some policies don't support women's economic advancement. So, we are working with governments under the She Trades initiative to determine precisely the problems women face and try to address those problems. We must think differently regarding women's access to finance. Can we think of nontraditional ways that women can access finance?
Is such thinking going on?
Yes, it is. We are working with different partners. We are part of the SDG 500, which is an initiative that involves other UN agencies. We are collaborating with the private sector and some foundations. The objective is to mobilize about $500 million to support MSMEs, particularly those led by women, to access resources with minimal requirements.
Developing countries export a significant amount of inputs to other regions for the production of personal protective equipment (PPEs). In the context of the Africa Continental Free Trade Area, is ITC supporting Africa in producing PPEs?
Our support is much broader than just for PPEs because the foundation of the AfCFTA is trade liberalization. It's how Africa positions itself to maximize the opportunities in free trade.
In the current context, is there an opportunity for African countries to produce PPEs? Yes. And this is already starting to happen. But at what cost and are we in a position to produce to meet the demand of the entire continent? I believe there is scope for improvement because we are still importing from outside.
You were heavily involved in trade matters in your country [Zambia]. What are your views on Africa's free trade area?
I am a believer in free trade and Africa should embrace this opportunity. But what needs to happen is that the level of political commitment should increase. In operationalizing the agreement, participating countries must come through on their commitments. Africa is positioned to attract investments. It has resources for domestic production. It has human resources. We must now organize ourselves better.
What support is ITC providing MSMEs in Africa in these trying times?
Our mandate includes working with MSMEs in support of economic development in developing countries. We support countries to better understand what has confronted them [COVID-19] these last few months. Through surveys, we have information on issues specific to certain countries. Our report builds on those efforts. We have the action plan, but alongside that, we work directly with businesses so they can navigate these challenging times.
We work with businesses to find different ways of managing the business-to-business interaction that used to be face-to-face. Now businesses use online platforms to trade. We have continued to provide consolidated information through the Global Help Desk, which is a one-stop shop for all trade-related information.
What message do you have for business owners in African MSMEs?
It's a difficult time for MSMEs, for sure. They must ensure they remain resilient in this difficult period. To survive, they must build on their innovative spirit.
Source: Africa Renewal

22 / 07 / 2020 - Kenya Reluctant to Seek Comesa Shield, Opts for Rehabilitation of Sugar Factories

Kenya is reluctant to seek extension of safeguards that protect the country from importation of cheap sugar from the Common Market for Eastern and Southern Africa (Comesa).
The EastAfrican has learnt that with only seven months to the expiry of the safeguards, Kenya has realised that having lobbied for an extension twice in the past, securing another could be a tall order and that the country cannot peg the survival of the sugar industry on protection from competition.
"Kenya has not applied for an extension of the safeguards. If it will to do so, it must present the request at the meeting of the Comesa Trade and Customs Committee, which brings together technical experts from all member states," Mwangi Gakunga of the Comesa secretariat told The EastAfrican.
The safeguards allow Kenya to limit duty-free imports from Comesa countries to a maximum of 350,000 metric tonnes annually because the country is unable to compete with other member states on a duty-free quota free terms.
The government has, therefore, resolved to lease the factories hoping to turnaround the companies, which have collapsed under the weight of years of mismanagement, corruption and influx of cheap imports.
The Agriculture and Food Authority (AFA) is looking for investors to enter into long-term leases for Chemilil, Nzoia and South Nyanza sugar companies alongside Miwani and Muhoroni sugar companies, both of which are under receivership.
"The objective is to facilitate turnaround of these companies to profitability through modernisation and efficient management, which will in turn enhance competitiveness in Kenya, the East African Community, Comesa and the global sugar market," said Anthony Muriithi, AFA director general in a public statement.
To make the factories attractive to investors, the government has restructured their balance sheets including writing off massive debts, tax waivers and penalties amounting to a staggering $572.5 million.
The leasing of the companies, which the government argues is a form of privatisation, comes after the country banned the importation of raw cane and brown sugar -- the latter has rendered local mills uncompetitive due to a significant surge in imports from Uganda.
Early this month, Agriculture Cabinet Secretary Peter Munya said that unscrupulous businessmen and traders were taking advantage of the Covid-19 curfew to smuggle raw cane and brown sugar into the country through the Busia border.
Also, millers who had also obtained temporary permits to import raw cane from Uganda from September to December last year, were also illegally still importing the raw cane.
"The country may soon be faced with a sugar glut occasioned by this increased importation and an eventual collapse of the industry," said Mr Munya in press statement on July 2.
In its report, the Sugar Task Force recommended among other, establishment of production zones for particular mills and merging of some underperforming ones to attract investors.
Dr Emmanuel Manyasa, economist and country manager Twaweza East Africa, said that leasing is just a "painkiller" for an industry faced with high production costs, uneconomic dependence on smallscale farmers and whose fortunes are bound to be hit by the expiry of the Comesa safeguards.
"Privatisation failed because investors know the industry is controlled by sugar barons and they cannot make money. Even leasing is not sustainable until we deal with the cartels," he told The EastAfrican.
Kenya's sugar production cost is estimated at more than $600 per metric tonne, twice that of other key sugar-producing Comesa countries, making the country an attractive export market.
According to Dr Manyasa, Kenya might fail to seek for an extension considering that Article 61 of the Comesa treaty stipulates the country must proof it has taken the necessary and reasonable steps to overcome or correct the imbalances for which safeguard measures are being applied.
"Removal of the Comesa safeguards will kill the industry totally," said Dr Manyasa.
Source: allafrica.com

21 / 07 / 2020 - Malawi: Minister Calls for Reduction in Internet Data

Blantyre — Minister of Information, Gospel Kadzako has advised Malawi Communications Regulatory Authority (MACRA) to seriously engage mobile telecommunications companies to reduce the cost of internet data to enable more Malawians enjoy services in the communication sector.
The minister said this on Monday when he toured Malawi Communications Regulatory Authority Offices in Blantyre.
Kadzako said Information Communication Technology (ICT) is deemed to be catalyst of any economy because people use internet data to access services to contribute positively to all spheres of development.
"However, right now, to own a smart phone is like a crime because of the cost of data. Here in Malawi, Internet data is being sold at 80 cent per second and expire within the specified time usage yet in our neighboring country, Tanzania the cost of data is as less as 4 cent per second.
"In view of this, Malawians feel like they are being skinned alive and they are much worried with the development because it is the mobile companies that are celebrating for making huge profits," he said.
The minister therefore urged Malawi Communication Regulatory Authority to quickly and seriously engage the mobile communications companies to address the problem for the enjoyment of Malawians.
He added: "Should we say that we are experiencing this problem because we only have three mobile telecommunications companies in Malawi? If yes, let us engage more players because we want Malawians to enjoy ICT services without any hindrance.
"This is the new government and people are expecting to see things being done differently."
Meanwhile, the minister has challenged to conduct structural and functional review in the operation of MACRA as one way of sanitizing the institution to serve Malawians better.
"We have seen funds from this public institution being used by political parties to serve their interests. How come MACRA can use K1billion per month for its operation?
"In addition, the institution has some people who were employed because of the political party they belong to and they have not any qualification or their papers do not match with the position they hold. As such, this new government will replace these irreconcilable individuals with those who are professionals," challenged Kadzako saying: "this is not witch-hunting but dealing with the problem in a different way."
In his remarks, MACRA Director General, Henry Shamu thanked the minister for paying a courtesy call to the institution.
He then concurred with the Minister on the expensiveness of internet data assuring him to engage mobile telecommunications companies soon to amicably address Malawians concerns.
Source: Malawi News Agency

21 / 07 / 2020 - Africa Can Tackle Medical Supply Shortages Through a Regional Response

Africa should open markets, diversify supply and strengthen regional value chains to become a competitive provider of certain health-related products, a new ITC report finds.
Africa can position itself strategically and develop a regional response to avoid healthcare product shortages similar to those triggered by the COVID-19 crisis. That's the main message of Medical Industries in Africa: A Regional Response to Supply Shortages, a new International Trade Centre (ITC) report.
COVID-19 severely burdened the global health system, driving a surge in demand for medical supplies such as masks, gowns and gloves. The World Health Organization warned in early March that international production of such goods would have to ramp up by 40% to meet demand.
Today, Africa sources only 8% of its health-related products from African suppliers. The continent can become competitive in some of these items while combating the crisis and building its own resilience to future pandemics, the ITC report finds. The African Continental Free Trade Agreement has a key role to play in supporting the regional medical industry, it adds.
'We examine the potential of the African medical supply industry and show how trade can be an important element of the continent's health response, both in the short and long term,' says Dorothy Tembo, ITC Executive Director a.i. 'We suggest a strategic mix of open markets, diversified procurement and stronger regional value chains' to position Africa strategically in the future trade landscape of the global medical industry while safeguarding the health of Africans.
Keeping the regional market open for essential health products is critical, the report says. ITC business surveys on non-tariff measures have found that companies in Africa frequently struggle to import medical supplies because of inspections and customs charges. In addition, tariffs are relatively high: African countries apply a 10.3% average tariff on these items, compared with 7.9% in non-African developing economies and 2.9% in developed countries.
African governments should review import regulations and consider temporarily lifting tariffs, taxes and other restrictions that hinder access to these goods - especially as the continent has limited sources of such products.
Regional value chains would help diversify global supply
That's why it's also important to diversify suppliers, the report notes. Africa provides just 8% of its own medical products, importing most of the rest from the European Union, China and India.
The report urges policymakers to consider regional suppliers with export growth potential. Diversifying would reduce the impact of export restrictions on essential goods and make the continent less dependent on just a handful of foreign suppliers. Egypt, Ghana and South Africa are viable alternatives for products such as disinfectants and adhesive bandages.
Governments also should help build up Africa's capacity to produce key medical supplies by developing regional value chains, the report says. Although the continent produces many of the inputs used to manufacture health-related products - such as rubber, fabrics and ethanol - these goods are often exported without any transformation.
Policymakers could support the development of regional value chains by channeling investments into these sectors, the report says. Furthermore, they could leverage negotiations in the context of the African Continental Free Trade Agreement to keep trade functioning smoothly along these value chains - for instance, making sure that these vital goods trade duty-free within Africa and that other regulations are harmonized.
Source: allafrica.com

21 / 07 / 2020 - Malawi: How the Casino Trade Could Boost Tourism to Malawi

Although Malawi has historically not been one of the most visited African countries, times appear to be changing. Over the last decade, tourism has grown steadily, with the last five years seeing a rapid acceleration. Malawi has a beautiful landscape and friendly population, so it is a natural choice for holidaymakers. However, one avenue that has perhaps not been exploited as much as it could have been, is the casino trade. Here is how this sector could boost tourism to Malawi, providing additional income for residents.
Popularity of Casinos in Africa's Main Inbound Tourist Countries
As a continent, Africa's main source of tourism comes from Europe, closely followed by the US. In both of these areas, online casinos are already popular, with plenty of sites that offer the chance to play online blackjack, as well as poker and slots from the comfort of your home. Similarly, both areas have well-developed bricks and mortar casinos that generate huge revenue for their respective countries. The opportunity to open casinos to cater both for tourists and locals in Malawi could reasonably be expected to generate a valuable income for the country.
Becoming a Casino Destination
Las Vegas was undoubtedly the first city to truly become known for its casino culture. It attracts almost 50 million tourists each year, in no small part thanks to its huge hotel & casino resorts which cater to all the needs of visitors. Seeing this success, a few cities have followed suit, including Tangier, Monte-Carlo, Baden-Baden, and several throughout Singapore.
Though perhaps the largest success has been Macau in China. Located in the South China Sea, this island is perfectly equipped for tourists. Well connected to the mainland, but with beautiful scenery all of its own, Macau has flourished since the addition of several large casinos. The Casino Lisboa and Grand Macau bring millions of tourists each year and local citizens enjoy the benefits too, with 15% of locals working in the industry.
Looking to Lilongwe for Inspiration
One of the pioneers of the casino industry in Malawi has been Lilongwe, our capital city. Lilongwe was already popular with tourists for the fantastic wildlife sanctuary at the heart of the city. However, the ability to diversify was recognized by the Casino Marina group back in 2016. Now the Casino Marina Lilongwe is a major tourist destination in Lilongwe, offering table games and slot machines to enthusiastic customers. The casino sits on the prestigious Golden Peacock Hotel sight, surrounded by beautifully manicured gardens. The experience is certainly a luxury one, that should be celebrated for the industry it has brought to the area. Following in its footsteps, two further casinos have opened, which each report a healthy income each year.
Other Suitable Casino Locations.
Already Lilongwe is home to 3 large casinos, but there is potential both in the capital to open more, or even make a nearby destination town. The Minister of Trade, Industry and Tourism has said that if controlled and nurtured carefully, the benefits of a casino industry could be vast. By the end of this year, the government has hopes to increase this figure from four percent to thirteen percent. This mission could not only create thousands of jobs for Malawians, but could also improve the country's financial standing.
Another city that could well be an emerging casino centre is Blantyre. This city is already home to two successful casinos, the Blue Elephant and the Colony Club Casino. As the centre for finance and commerce, Blantyre is already home to many hotels suitable for business travellers, so would be well equipped to deal with a boost in tourism numbers.
It is located close to the Chileka International Airport, so the travel infrastructure would not be an issue. Further to this, the area already has a number of distinctive features that would appeal to tourists, including the characteristic architecture of the area, as well as the magnificent Mount Soche
Source: Nyasatimes

07 / 07/ 2020 - Rwanda Tea Exporters Reel Under Low Prices

Tea exporters in Rwanda are reeling as prices drop to an all-time low of below $2 per kilogramme on the international market, due to low demand and oversupply.
Before the Covid-19 pandemic hit the sector, the country exported up to 9,317 tonnes of processed tea worth Rwf25 billion ($27.6 million) between January and March 2020, compared with Rwf20 billion ($21.8 million) the same period last year.
Prices started dropping in the second quarter as key buyers closed shop due to the restrictions imposed on movement of goods and services due to the pandemic.
Rohith Peiris, the general manager of Sorwathe, a tea growing and exporting company said. "The first half of the year has been tough. Tea prices have been declining significantly; a kilogramme of processed tea now stands at $2 on average. It was $3 and above per kilo last year. "This is the lowest it has ever been. The prices fluctuate, even below $2 per kilo," said.
Pie Ntwari of the National Agriculture Export Board said, "Tea consumers have sharply reduced and some established buyers have already closed. This explains the reduction of prices on the international market."
He added that Rwanda was exploring new markets including the Middle East and Russia.
The higher prices recorded between January and March are largely attributed to bigger auctions. India played a big role leading to an increase in demand for the East African auction, before being greatly affected by the pandemic.
John Baffes, the senior agriculture economist with World Bank's Development Prospects Group said, "Tea prices, especially at the Kolkata and Colombo auctions, increased recently, while prices at the Mombasa auction remain subdued. Kolkata and Mombasa auctions reached 13 and six-year lows, respectively.
"In response to ample supplies in Kenya, there have been disruptions of tea shipments to various importing countries, and disappointing demand (in part due to the lockdown in India)."
He added that tea prices (auction average) are "expected to drop 10 per cent in 2020 mostly due to weak demand, before experiencing a relatively softer recovery in 2021".
Tea exports to top three global markets declined significantly in the first quarter as the world grappled with the Covid-19 pandemic.
Source: Allafrica.com
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