Current Trade News

Nairobi — President Uhuru Kenyatta has directed the Ministry of Education to expedite ongoing consultations on the safe reopening of schools ahead of the anticipated relaxing of movement restrictions on Saturday.
Speaking when he delivered his Madaraka Day address, President Kenyatta asked the ministry to formulate a calendar on the gradual reopening of learning institutions which were shut in mid-March in a bid to avert the unrestrained spread of COVID-19 which has infected 1,962 people.
"I am hereby directing that the Ministry of Education fast tracks and finalizes ongoing consultations with all stake holders that will provide us with an appropriate calendar for the gradual resumption of education in the country," he said.
While acknowledging concerns expressed by parents and guardians of candidates sitting for national examinations, Kenyatta however emphasized on the need to put protocols in place to ensure safety of learners and teachers once schools reopen.
"I appreciate the anxiety weighing heavily in the minds of children and parents, especially those preparing for national exams but the guidelines should also include protocol to guarantee safety of children , parents and grandchildren," the Head of State said.
President Kenyatta's remarks come at a time the education ministry is reviewing a preliminary report on the reopening of schools ahead of further guidelines on current COVID-19 containment regulations expected to lapse on June 6.
Last week Friday, Education Cabinet Secretary Prof George Magoha received a report from the Education Response Committee on COVID-19, a nine-member team established to advise the government on the modalities of re-opening schools.
He said the ministry's decision on whether of not to reopen institutions of learning will be guided by advisories issued by the health ministry under the National Emergency Response Committee on COVID-19 .
"All stakeholders should therefore be prepared to face the reality of a likely extended closure of our schools, given that out government will never sacrifice the health of our children at the expense of an education that can wait to be offered at a later time when the safety and health of children can be guaranteed," he said.
The recommendations captured in the interim report will be tabled before the National Emergency Response Committee on COVID-19 for further consultations.
The Secretary General of the African Continental Free Trade Area (AfCFTA) Secretariat, Mr. Wamkele Mene, has described an efficient implementation of the intra-African free trade agreement as a critical tool in the hands of the continent's leaders to stimulate and re-inject dynamism into Africa's post COVID-19 economy.
Mene, who participated as the guest speaker in a virtual conference that was hosted by the American Business Council (ABC), Nigeria, in Lagos, at the weekend, said the AfCFTA remains the continent's hope for economic recovery.
He, stressed that no African country has the financial muscle to initiate a significant economic stimulus package the way the United States of America has done when it launched more than $1 trillion as stimulus package.
He added: "I believe that even with the challenges of COVID-19, which I see as a crisis with an opportunity, most developed countries have introduced economic relief packages to re-inject dynamism and growth in their own economies.
"The United States of America introduced over $1 trillion stimulus package. The European Union has introduced $500 billion and may increase it to close to a $1 trillion.
"The USA also packaged $60 billion to its aviation sector in form of grants and loans. But many African countries do not have the monetary policy space, neither do they have the fiscal policy space to provide such substantial economic relieve packages, which means that for us as Africa, the implementation of the AfCFTA agreement is our own stimulus and economic relief package."
He also explained that an effective implementation of the free trade area agreement would significantly boosting intra-African trade and investments and stave off the severe contraction in the Gross Domestic Product (GDP) of between 2.5 and five per cent of the GDP that was predicted for the continent by the World Bank.
Mene added: "The AfCFTA is actually the driver of economic growth in Africa and a critical tool that we have in our disposal. As I said there are very few countries in Africa that can put on the table the substantial amount in stimulus packages that we have seen elsewhere. So this AfCFTA is Africa's stimulus and economic recovery plan."
He stated that the AfCFTA would liberate the continent from inhibitive trade policies of the western world that has consigned African countries as the producer and exporter of primary commodities with the imposition of 1000 per cent tariffs or more on the export of processed primary products like leather from Africa.
He also said the agreement would ignite industrialisation in the continent by encouraging member states to add value to their primary products and sell them within the continent at zero tariffs.
"What we require is an action plan for the implementation of an industrial development plan strategy across Africa in a disciplined manner over a number of years. This, to me, is the important factor as we implement the free trade agreement," he said.
He, however, stated that he was concerned about the difficult challenges member countries would face while implementing the agreement and playing by its rules in spite of the optimism and political will shown by African leaders at African Union's session about the AfCFTA.
"What I worry about is the inability or willful lack of compliance because sometimes conditions are difficult. The worry I have is the implementation and compliance with the rules.
"Where the bigger challenge will be is from the border (custom) officials in the remote parts of the member states and whether or not the officials will adhere to the rules that required them to apply the AfCFTA procedures. This is the number one concern for me," he said.
The secretary general of the AfCFTA secretariat said that the African Export-Import Bank (Afreximbank) has set aside $1 billion facility to assist countries that are state parties to the agreement, to cushion revenue losses they might suffer due to the implementation of the agreement.
The facility, according to him, would help countries to make the adjustments required by the transition and cushion the loss from revenue forgone from duties and tariffs, noting that "there will be winners and losers.
"There would be immediate winners from countries that already have industrial development capacity. Some countries will experience short to medium term revenue losses as a result of liberalising their trade, reducing tariffs and allowing imports into their markets.
"The Afreximbank has offered an adjustment facility of about $1 billion that will assist them," he said.
The virtual conference, according to the President of ABC, Mr. Dipo Faulkner, was called to address the concerns of private sector stakeholders as the continent marches toward the implementation of a free trade agreement.
East Africa stands to benefit from the drop in crude oil prices at the international market as it would ease pressure on widening current accounts and arrest a surge in inflation. The cost of consumer goods could also reduce as manufacturers are some of the heaviest consumers of fuel.
However, lack of strategic reserve facilities means the region can't take full advantage of the low prices--caused by the Covid-19 pandemic--and build up their stockpiles, which would guarantee the benefits last longer even when prices at the international market rebound from the current low levels of $26.10 per barrel.
"The East African region has missed an opportunity for stockpiling because there are no facilities," George Wachira, an oil industry expert, told The EastAfrican.
Kenya recorded the biggest drop in fuel prices in over a decade last week on May 14 after the Energy and Petroleum Regulatory Authority (EPRA) unveiled new maximum wholesale and retail petroleum prices with the cost of diesel and petrol coming down drastically.
In the latest review, the cost of diesel reduced by Ksh19.19 ($.17) per litre to retail at Ksh78.37 ($.72) while the price of super petrol declined by Ksh9.5 ($.08) to retail at Ksh88.33 ($.82).
The changes are based on the average landed cost of imported super petrol, which decreased by 38.94 per cent from $309.03 per cubic metre in March to $188.07 per cubic metre in April.
Diesel decreased by 44.04 per cent from $432.70 per cubic metre to $242.13 per cubic metre.
The review shows that free on board prices of murban crude oil imported in April were at $17.64 per barrel, a decline of 50.42 per cent from $35.58 per barrel in March.
"The computation of the pump prices has taken into account the changes effected by the Tax Laws (Amendment) Act of 2020 that made taxes and other levies part of the vatable amount in the calculation of VAT for petroleum products," said Robert Pavel Oimeke, EPRA director-general.
Kenya's petroleum import bill in 2019 stood at $2.9 billion, a decline from $3 billion in 2018 according to the Economic Survey 2020 while in Tanzania it stood at $1.8 billion and Uganda $874 million.
Savings on import bills would have ripple effects on the current accounts deficits that regional nations are struggling to narrow in the wake of a decline in exports and remittances.
In Tanzania, the Energy and Water Utilities Regulatory Authority announced a reduction in retail prices for the month of May in which the cost of super petrol declined by 10.5 per cent while that of diesel went down by 7.17 per cent.
The low prices at the international market mean that countries in the region will record a drastic decline in petroleum import bills.
Maputo — The Mozambican government announced on Tuesday that it will subsidise the price of raw cotton by six meticais (about nine US cents) a kilo.
Negotiations over a new minimum cotton price broke down on Monday, with the companies that buy cotton from the peasant producers demanding a steep reduction in the price.
The 2019 price was 23 meticais per kilo for first grade cotton, and representatives of the producers wanted it to be kept at this level, if not increased. But the buyers proposed 18 meticais, and said they could not go beyond 19 meticais.
The government had to solve this impasse, which it did by granting a subsidy. Speaking to reporters after the weekly meeting of the Council of Ministers (Cabinet), Agriculture Minister Celso Correia said the minimum price for first grade cotton in this year's harvest will be 25 meticais, and for second grade cotton 18 meticais per kilo.
But this money will not all come from the purchasing companies. They will only pay 19 meticais a kilo: the other six meticais will be a government subsidy. In other words, taxpayers will pay almost a quarter of the price the producers receive for their first grade raw cotton.
"As you know, cotton on its own does not provide an adequate household income in line with the households' cost of living", sad Correia. "The agreement the government has reached with the comanies promoting cotton is that in the next agricultural campaign (2020-2021), in addition to cotton, they will also step up diversifdiatuion into other crops in these productive blocks".
This diversification, the Minister claimed, would allow an increase in household income. The government would prioritise soya, sunflower and maize as alterbative crops, to be sown under a system of crop rotation.
Correia believed that, with the rise in household incomes, peasant farmers would feel encouragwed to continue producing cotton.
Over the years cotton farmers had always been below the poverty line, said Correia, "but our projection is that next year these households can get out of poverty, which is our main priority".
Correia puts the cost of the new subsidy to the government at 240 million meticais a year. At six meticais a kilo, this suggests that the government expects 40,000 tonnes of raw cotton to be marketed this year.
Maputo — The Mozambican government has reversed its decision to impose Value Added Tax (VAT), at the standard rate of 17 per cent, on sugar, vegetable oil and soap.
These goods, regarded as essential had been zero rated for the past 18 years, but it was always intended that they should pay VAT.
The VAT exemption was removed in December 2019, and so, as from January, the prices of these goods went up. No attempt was made to inform consumers of the impending price rises, and so the first shoppers knew about it was when they found themselves paying an extra 10 meticais (about 15 US cents) for a kilo of sugar.
Companies that produce soap and edible oil were furious when the VAT exemption disappeared. Some of them claimed they would not be able to sell their products at a higher price, and even appeared on television threatening to close their businesses down.
So the government retreated. At the end of Tuesday's meeting of the Council of Ministers (Cabinet), the Deputy Minister of Industry and Trade, Ludovina Bernardo, said that reinstating the VAT exemption was necessary in order to attenuate the economic impact of the coronavirus pandemic.
The VAT exemption covers not only the finsihed goods, but also the raw materials, equipment and parts imported by the sugar, vegetable oil and soap industries.
The final decision, however, must be taken by the country's parliament, the Assembly of the Republic. Bernardo said the government is submitting an urgent bill to the Assembly, altering the VAT code so as to reinstate the VAT exemptions on these goods. The exemptions, she added, should remain in force until 31 December this year.
"Because of the impact the pandemic is having on our population, whose purchasing power is continuing to shrink, the government thought it best to reinstate this VAT exemption", Bernardo said.
She also announced said the government has approved fiscal, customs and monetary measures to support private business, in order to ensure a rapid economic recovery. But these measures will only be made public, she added, after implementation measures have been discussed.
Maputo — The Mozambican government's Cashew Promotion Institute (INCAJU) forecasts that in the current (2019/2020) campaign, 148,300 tonnes of cashew nuts will be marketed, which would be a four per cent increase on the 2018/2019 campaign.
According to the head of the INCAJU Economic Analysis Department, Lucia Antonio, by the last fortnight of February over 138,000 tonnes had been marketed at an average producer price of 39 meticais (about 57 US cents) per kilo.
"This means that the equivalent of about 83 million US dollars was injected into the rural economy", said Antonio.
Currently 17 cashew processing plants are operational, employing 16,700 workers, of whom 9,900 are women.
The amount of raw nuts that the domestic processing industry can absorb has risen from 54,180 tonnes in 2017, to twice that amount, 108,000 tonnes, in 2019.
Antonio lamented that the international cashew trade has become highly unfavourable to Mozambique, largely because India moved to protect its own cashew producers by raising the surtax on imported cashew kernels from 45 to 70 per cent. China, another major purchaser of Mozambican cashew kernels, cannot fill the gap because of the economic disruption caused by the Covid-19 pandemic.
INCAJU was set up to revive the Mozambican cashew industry, and Antonio claims success in planting new trees and in the integrated management of the national cashew orchard. This, she says, has led to the improved production and marketing of cashew nuts over the past five campaigns.