Market News

07 / 07 / 2020 - Tanzania Middle Income Accession, What It Means

WAS hinted by the World Bank last year, that sooner than later Tanzania would graduate from Low income economic category to a more advanced lower middle-income economic level.
As it's common to any society built on different schools of thought, this incident drew opposing responses - some chest thumped for the milestone while others loathed the upgrade.
This essay is in no way trying to play a "judge - complainant - accused" role, but to unearth the unseen truths behind this accession and to remind everyone that both, the jubilants and critics, have points that needs to be taken into account.
It has taken 59 years for Tanzania to arrive to the position where it is, a journey that involved trying two distinct economic philosophies - socialism and capitalism - and draw a number of lessons which benefited both the experimenter and outside observers.
From per capita income of around 200 US dollars in the late 1980s - when economic liberalization policies began - to 1,100 US dollars in 2020, no sane person can coldly welcome the tremendous transformation. Apart from policies put in place by hosting countries, foreign investors are highly interested in the purchasing power of the local market.
Consumers with stable income are likely to spend more on products and services made in the particular country than not, and in some cases, the first criterion outweighs the latter. It is a no brainer that Mauritius, with a GNI per capita of 12,740 US dollars stands to be an attractive destination for Nestle processing plant than say, Togo, with 690 US dollars GNI per capita.
An assumption behind is that the consumers in 'richer' markets are likely to spend more as they earn more than their counterparts with smaller per capita.
However, it is prudent to put this clear that, this measure doesn't mean that everyone in Tanzania earns that amount of money per year, or that the Bretton Wood institution arrived to that conclusion after getting every citizen's bank accounts' records. Far from truth.
Per capita income is obtained after dividing country's Gross Domestic Product (GDP) with its population. GDP or national income, as it is referred in some accounts, is a monetary value of all the finished goods produced in the country in a specific period of time.
GDP is yet another confusing measurement as it does not give the 'redistributive' picture to anyone who tries to get an individual progress in that particular country. Take this example; Kenya has got a GDP that is currently over 95 billion US dollar, higher than Tanzania's 63 billion US dollar.
Nonetheless, Kenya supremacy in productivity has little relationship with curbing the poverty rate to majority of its citizens. World Bank statistics shows that the country has 36 per cent of its people living below 1.9 US dollar per day, whereas Tanzania with relatively low GDP and bigger population has recorded only 26 per cent people under a poverty rate.
What happens is that few brands like Azam, Azania and MO can triple their production and end up giving a country a false impression of total progress. So, the cold reception of this development deserves to be taken with a grain of salt since per capita income measurement is a dividend of 'misleading' GDP.
But there are challenges which will be associated by this accession that Tanzania has to be prepared to handle. Tanzania is a beneficiary of a number of non - reciprocal trade agreements that offers it a preferential treatments, which includes agreements like EU's Everything But Arms (EBA) and UNCTAD's Generalized System of Preferences (GSP).
Taking EBA as an example, a scheme grants all Least Developed Countries (LDCs) a full quota and duty free access to EU Single Market for all products with an exception to arms and armaments. Thanks to this arrangement, our coffee, horticultural products and pulses have been finding smooth landing in European markets for years.
According to United Nations Conference on Trade and Development (UNCTAD) - which has the ownership of LDCs classification mandate - a country will be regarded as an LDC if has per capita income of less than 1,025 US dollars among other criteria.
As of now, Tanzania has already crossed that mark with more than 70 US dollar threshold.
In essence, countries like Botswana, Cape Verde, Maldives, Samoa and Equatorial Guinea, graduated from LDC status and were subsequently removed from EBA's benefits in years 1994, 2007, 2011, 2014 and 2017 respectively, Tanzania stands be the next loser of benefits offered by the scheme once all the three criteria, have been proved to have been met by the member states.
Besides, we can still have our long sigh, as this is not a knee - jerk response, it may take some time before the UN committee approves the status. For the time being, we got to prepare ourselves by crafting some intelligent bilateral agreements with our major markets and lowering costs of doing business in the country to make our products more competitive.
Source: Allafrica.com

07 / 07 / 2020 - Tanzania: Cassava Offers Untapped Opportunities for Peasants

CASSAVA production offers immense untapped opportunities for extending labour use in the country and exploits price peaks in food market that would ultimately lead to increased earnings for smallholder farmers.
Tanzania is among the three African countries that produce about 70 per cent of Africa's cassava output alongside Nigeria and the Democratic Republic of Congo.
Cassava has huge potential to boost farm incomes, reduce rural and urban poverty and help close the food gap.
Globally, cassava is the fourth most important staple crop after rice, wheat and maize, and plays an essential role in food security.
Currently, about half of the world production of cassava is in Africa. Cassava is cultivated in around 40 African countries, stretching through a wide belt from Madagascar in the Southeast to Senegal and to Cape Verde in the Northwest.
Cassava processing for value addition is not only an important strategy for addressing post-harvest losses but the potential to create additional employment opportunities along the supply chain.
This is because cassava starch is an important source of biomaterial for different food and non-food industrial applications.
It is from this backdrop that Roijok Progress Centre has for years being involved closely in promoting farmers' efforts in cassava production with the end goal of boosting their earnings as important tool in the fight against poverty.
The Managing Director of the Roijok Progress Centre, Ms Rose Urio said they have worked with smallholder farmers through contract farming while assuring them reliable markets for their products.
"The initiative that goes through the whole cassava value chain has transformed smallholder cassava farmers through increased productivity while boosting their earnings for improved living standards," she said.
She said among the many successes that the organisation posted in working with smallholder farmers includes the empowerment of women and youth take active part in cassava production.
Cassava is one among the foods produced in more than 17 regions in Tanzania, more than 60 industries in the country source their raw materials from cassava and as much as health is involved cassava has much protein and the best lithium is found in cassava flour.
Due to cassava's growth characteristics and ability to grow in poor soils and regions prone to drought, it is preferred by resource poor farmers in many tropical countries.
While cassava plays an important role as a food security crop for subsistence farmers, it is prone to rapid postharvest deterioration.
Moreover, farmers producing cassava can increase their income by finding alternative end uses to home consumption.
To meet the high demand for cassava in Tanzania, cultivar selection, production and processing all need to be improved.
Enabling policies that create satisfactory business opportunities for small holder farmers, traders and processors for starch industries is also critical.
Ms Urio thanked the government for the encouragement in the effort to promote cassava production and particularly when the parliament in 2017 declaring the crop as one with immense business opportunities that would lift farmers from poverty.
She said Roijok Progress Centre has been engaging in cassava production for eight years with their main goal being that of commercialising cassava to boost farm-ers' earnings and contribution to economic growth.
Throughout this period, the organisation has been involved in various campaigns to create awareness particularly on best cassava farming practices and how farmers can explore other potentials along its value chain.
For example, one of the successful campaigns was Cassava for life which was held in Tanga Region in collaboration with the Ministry of Agriculture through which they managed to secure new markets within and outside the country.
Furthermore, the Managing Director pointed out the fact that of all the other products, cassava product has almost more usage and benefits in the world than other food products.
Apart from being food for human being and animals, cassava has other important use namely for making clothes, papers, mixing colours as binders, all batteries use lithium and the best lithium is found in cassava.
She noted that her company has opened up a large door which helps different people to fight against poverty where they have been sending people out of the county like USA to learn more about agriculture and many youth are happy for getting this opportunity as well as empowerment programme.
Ms Urio, as the founder of the Roijok Progress Centre has played a greater role in encouraging youth and women to work hard and become successful.
All these efforts were recently recognised after emerging an award winner of MALIKIA WA NGUVU in 2016 and in 2019 as winner on Women Empowerment.
She is also a motivator and a mentor to many youth and women in different matters. As an integral component most Cassava in Tanzania are an integral component of most cropping systems and among the more important staples in many zones.
It plays an important role as a food security crop and provides useful opportunities for extending labour use and exploiting price peaks in the food market.
Source: allafrica.com

24/06/2020 - Africa: Kagame Invites U.S. Investors to Continent's Economic Recovery Process

President Paul Kagame encouraged American investors to participate in economic opportunities as Africa emerges out of the Covid-19 recovery process for mutual benefit.
The President made the call while opening the four-day Corporate Council on Africa (CCA) Leaders Forum.
CCA, which was established in 1993, promotes business and investment between the United States and African countries.
Opening the forum, the President said that there are mutually beneficial opportunities emerging as the continent seeks to recover and get past the pandemic.
Last week, the African Union launched a medical supply platform pooling the procurement of essential health items implemented in partnership with the African private sector.
The initiative is spearheaded by business magnate Strive Masiyiwa at the AU's invitation.
Kagame noted that there is room for American private sector participation in the initiative.
Another aspect that has room for collaboration he said is ensuring adequate fiscal space for Africa which is essential for a sustainable public health response as well as to preserve jobs and livelihoods.
An additional opportunity on the continent is to work together in trade especially with the upcoming launch of the African Continental Free Trade Area.
"The US has been a strong supporter of development through trade such as with AGOA, as these internal trade obstacles continue to fall, we look forward to strong engagement from American companies and investors working together with African firms," Kagame said.
Kagame said that in response to the pandemic and its effects, closer and stronger cooperation between countries and partners will allow for better and stronger response as countries strive to deal with public health challenges, trade and business.
"Free trade benefits more from the understanding that we cannot avoid working together if we want to thrive," he added.
Highlighting Rwanda's recovery outlook, the Head of State said that the local economy prior to the pandemic was strong, stable and with growth in the medium and long term assured.
This, he said, gives the government confidence in investing in the recovery of the economy.
He also noted that the Covid-19 curbing measures such as lockdown, testing, tracing among others had proven to be effective as the country continues to see recoveries. The first case of Covid19 was reported in Rwanda about 100 days ago.
The summit was held under the theme: "Resilient U.S.-Africa business engagement to drive post-Covid-19 recovery".
Source: allafrica.com

06 / 07 / 2020 - East Africa: Malawi Benefits from COMESA Digital Financial Inclusion Plan

Malawi is among the top five countries in Africa to benefit from the Common Market for Eastern and Southern Africa (Comesa) digital financial inclusion plan.
The regional bloc, Comesa is implementing a digital financial inclusion plan aimed at promoting trade within the region and includes marginalised communities, which are excluded in terms of financial inclusion.
This was made known last week at a high-powered business case validation meeting held in Lusaka, Zambia.
Governor of the Reserve Bank of Malawi Dr. Dalitso Kabambe in his keynote speech said: "Interoperability is key to commercial banks and network operators for the uptake of digital financial services; it enhances Small and Medium enterprises (SMEs) trade through facilitation of seamless money transfer."
Comesa Business Council chief executive officer, Sandra Uwera expressed gratitude to the Malawi Government for supporting the Digital financial Inclusion initiatives, which will increase intra-trade within COMESA region by at least 10% annually.
Project Manager for Digital Financial Inclusion at COMESA Business Council, Dr. Jonathan Pinifolo said: "The North-South corridor is the most extensive corridor system in the region, linking the largest number of countries in eastern and southern Africa.
"The countries we are working with in this region include Malawi and Zambia, and out of the 21 countries, they have picked nine countries in Africa based on the trade activities taking place within the various trade corridors.
According to Pinifolo, the nine countries include; Mauritius, Egypt, Ethiopia, Zambia, Malawi, Kenya, Uganda, Rwanda and Tanzania in EAC.
Pinifolo further explained that Comesa has already developed a business case report and follow up interventions which include harmonising Finance and ICT policy frameworks within the region, capacity building of Micro, Small and Medium Enterprises (MSMEs)
"We have also developed the commissioning of a regional integrated digital common payment scheme incorporating commercial banks, Mobile Network Operators, Fintechs and other institutions providing financial services," said Pinifolo.
Speaking during the opening ceremony, Assistant Secretary General for Programmes at COMESA, Ambassador Dr. Kipyego Cheluget said that COMESA as a strong advocate for enterprise growth and development of our local and regional markets, the meeting was held in a timely period when they are focusing on the growth of Small and Medium enterprises.
"Africa's economic transformation lies in the ability to increase value addition and strengthen the participation of our SMEs in national and regional supply chains", said Cheluget.
Among other institutions, the business case validation was attended by Reserve Bank of Malawi, MACRA, Ministry of Finance and Economic Planning, Ministry of ICT, Ministry of Trade and Industry, Malawi Confederation of Chamber of Commerce and Industry (MCCI), Commercial banks (National Bank of Malawi and Standard Bank), Telecommunication Operators (Airtel and MTL), NITEL, SPARC Systems, ICT Association of Malawi (ICTAM), NABW, Bayer, National Association of Small and Medium Enterprises (NASME), Legis Policy Associates from Kenya and Kiani Holdings from South Africa.
The Common Market for Eastern and Southern Africa is a free trade area with twenty-one member states stretching from Tunisia to Eswatini.
Comesa was established when a treaty was signed on November 5, 1993, in Kampala, Uganda, and then ratified the following year in Lilongwe, Malawi, on December 8, 1994. It replaced the former Preferential Trade Area (PTA) that existed in 1981.
Source: allafrica.com

23/06/2020 - East Africa: EAC to Lose U.S.$5 Billion in Export Revenue in 2020, Report

The five individual member states of the East African Community will lose more than $5 billion (roughly Rwf4.7 trillion) from agricultural exports, this year due to the coronavirus pandemic, according to McKinsey & Company's latest report released in June.
"Africa's exports of food and agricultural products are worth an estimated $35 billion to $40 billion a year, and some $8 billion a year flows through intra-regional trade in these products," the report reads in part.
However, as a result of the coronavirus crisis, there is already reduced food demand, disruption of trade in export crops even within regions, and severe crop production and processing shocks.
The supply disruptions could result in a severe economic blow for countries such as Kenya, Tanzania, and Uganda which rely on agricultural exports as primary or secondary source of export earnings.
Additionally, the report, Safeguarding Africa's Food Systems Through and Beyond the Crisis revealed that "Africa's food and agricultural imports amount to between $45 billion and $50 billion a year along with $6 billion a year in imports of agricultural inputs and if measures are not checked, we are likely to lose the foreign earning from agricultural products."
The report noted that the disruption follows various coronavirus containment measures including the suspension of flights and ultimate reduction of about 75 per cent in available cargo capacity and a twofold increase in cargo costs among others.
Statistically, around 80 per cent of agriculture exports from Africa are to four regions; Western Europe (around 45 per cent), South and East Asia (20 per cent), the Middle East (10 per cent), and North America (five per cent) and all the markets were inaccessible due to lockdowns and suspended flights.
On the other hand, the report warned of food price volatility and nutritional problems due to lack of adequate nutritional foods as a result of increased food insecurity due to affordability of agricultural inputs, and depreciating currencies.
In Rwanda, the Economic Recovery Plan Blueprint, noted that since the Covid-19 outbreak, the weekly volume of exports had dropped to 30-34 MT but was optimistic that it would pick up in coming days.
However, among the ongoing interventions is working with the national carrier, RwandAir to deliver goods to some markets in Europe which has allowed producers maintain delivery of fresh produce to a number of markets in Europe.
The report suggests that safeguarding food security through understanding and managing the forces that shape demand, and ensuring agricultural production is sustained. Adding that "It will also be important to maintain trade flows, and keeping borders open for trade as far as possible"
To resume normalcy of horticulture export, the volumes of weekly exports will have to rise from a current export capacity of 30-35 Metric tonnes to between 80-100 Metric tonnes as was the case prior to the Covid-19 pandemic.
NAEB is working with exporters to consolidate demand in markets served to ensure that there are volumes available to respond to demand.
This has ensured that producers and exports are in position to respond to demands collectivity as opposed to individual efforts which can be challenging for operations.
Other interventions including input support such as subsidization for products such as fertilizers to ensure that farmers can be able to maintain productivity to respond to demand in global markets. The support also includes training on best farming practices to improved productivity and compliance to global market standards.
The agency will also rollout marketing and promoting local produce globally for market linkage as well as work with producers to facilitate compliance and certification.
The intervention is also in the form of facilitation of Business to Business linkages to for exporters to interact with buyers in global markets improving chances of further cooperation and opening new markets.
Source: allafrica.com
  1. 22/06/2020 - Trade falls steeply in first half of 2020
  2. 02/06/2020 - Tanzania: JPM, Uhuru Amicable Talk Heralds Smooth Cross-Border Trade
  3. 02/06/2020 - Tanzania: Govt Sets Strategies to Restore Sisal Production
  4. 02/06/2020 - Rwanda: 1 in 9 Rwandans Owns a Business