Current Trade News

INDUSTRY and Commerce Minister, Dr Sekai Nzenza, says increased collaboration between productive sectors is critical for the country to boost domestic production and effectively substitute unnecessary yet costly imports.
As a result of subdued domestic production, which has seen manufacturing capacity utilization drop to 36,4 percent in 2019 from 48,2 percent in 2018, according to the Confederation of Zimbabwe Industries (CZI), Zimbabwe is heavily reliant on imports for both raw materials and essential consumer goods.
For instance, the country's merchandise imports clocked US$4,8 billion in 2019, compared to cumulative export estimate of US$4,5 billion, the Reserve Bank of Zimbabwe reported. The apex bank noted that exports were largely weighed down by lower agriculture and mineral exports, tobacco and gold in particular.
Sustained power outages, persistent fuel shortages, foreign currency challenges and high operational costs amid rising inflationary pressures, among other factors, adversely affected production in the mining sector and consequently mineral exports.
The trend persistently piles pressure on forex requirements at a time when foreign direct investment and diaspora remittances through formal channels are also minimal.
A combination of reduced local output, limited exports and prevailing exchange rate distortions, have compounded the situation, thereby frustrating viability of local producers and heightening the plight of consumers.
Due to shortages in supply of some basics, Government last November relaxed import regulations to allow individuals with free funds to buy basic goods from outside the country.
In an interview, Minister Nzenza admitted that this duty-free import window has created new complications in the form of sprouting of and thriving informal sector, which has stacked pressure on registered players.
She noted that in her engagement with industry stakeholders, big corporates have raised complaints over unregulated informal activities that are squeezing out their operations.
"I have spent the last three months consulting captains of industry and key stakeholders to hear their concerns and what is working well or not.
"I have met CZI, retailers, millers, small and medium enterprises and different private sector players.
"In 2020, we are saying industry's role is to promote growth. We went to Inyanga for a review of our strategy and we are working on promoting local production, which buttresses the thrust of import substitution," said Dr Nzenza.
A DELEGATION of traders that is led by the Tanzania Private Sector Foundation (TPSF) which had planned to leave for the Democratic Republic of Congo on April 6, 2020 to explore trade and investment opportunities has been postponed indefinitely due to threat of Coronavirus.
The TPSF Chairperson, Ms. Angelina Ngalula, said in joint press conference in Dar es Salaam on Tuesday that the trip has been postponed until when the situation on Coronavirus will be clear.
"We have decided to postpone our trade mission following the reported cases of disease in both countries," Ms. Ngalula said.
She said preparations for a three-day trade mission for DR Congo were in top gear and the number traders/investors who registered for the mission surpassed the target of 200 people who earlier planned.
"I also take this opportunity to inform the business community and public in general that the indefinite postponement meant we will continue with preparations while awaiting clearance from the authorities when the virus controlled," she explained.
"Tanzania is producing quality Rank ( + / - ) goods that have a strong market in DRC. But Tanzania has also many economic opportunities. We want these things to be known to our colleagues in the DRC. Tanzania currently chairs the Southern Africa Development Community (SADC) Business Council, meaning we have the duty to encourage and promote business among ourselves. This is the background behind this tour," she explained.
TPSF recognizes the immense focused efforts of the government in building this enabling infrastructure and we thank the government for this great job," she said.Rank ( + / - )
Speaking at the same venue, Tanzanian Ambassador to the DRC, Lt. General (rtd), Paul Mella called on the business community to mobilize and fully exploit business potentials and opportunities to do serious business.
"I call on potential Tanzanian business people to come forward and register for trade mission," he said, noting that the market was big and reliable.
Earlier, Representative of Ambassador of the DRC in Tanzania, Mr Moma Kampinga said the Tanzania's trade mission to his country would be of paramount significance as two countries have a long-time history of cooperation.
Claudio Descalzi, CEO of Italian gas and oil company ENI, has likened Mozambique’s liquefied natural gas potential to a “feast”.
The feast, which Mozambique and its international partners yearn for, boasts a starter and two main courses that could place the country among the world’s 10 largest exporters of liquefied natural gas (LNG) within the next decade.
The banqueting will begin in 2022, when 3m tonnes of natural gas per year (3mtpa) will travel in a liquefied state under the high seas.
“It’s a large starter. It’s lunch, dinner, even, but we prefer to call it a starter in comparison with the much larger reserves that Mozambique has,” said Descalzi during the announcement of a final investment decision to fund a floating platform that will be connected by an umbilical cord to the Coral Sul reserves.
One of the “main courses” is expected to be served in 2024, by the Area 1 consortium. The plan envisages two 12.88mtpa LNG pipelines on the Afungi peninsula running from the Golfinho and Atum reserves. With further deposits to tap into, this could expand to up to eight lines. The final decision to invest was announced in June 2019 by Anadarko, since bought by Occidental, which in turn sold its LNG assets to Total. “As a new operator, we are fully committed to the project”, affirmed Total CEO Patrick Pouyanné in September.
The second main course will be served by the Area 4 consortium with the exploration of the Mamba deposits, which will feed two LNG pipelines at an overall rate of 15.2mtpa, with these lines predicted to run from 2024/25 in the Afungi industrial area, shared with Area 1. But definitive confirmation of investment is needed for Area 4. The president of Mozambique’s National Petroleum Institute (INP), Carlos Zacarias, hopes that this will happen “as soon as possible, towards the end of this quarter”. According to Zacarias, everything currently depends on formalising the commitment that has already been agreed upon by all partners and backers.
State of play
But what’s the latest on the investments themselves? Progress on construction of the extraction and exportation vessel is at over 60%. Work on tow-in installation in the Mozambique Channel is scheduled for the end of 2021, according to Zacarias, with the entirety of the LNG to be sold to BP.
As for the land-based infrastructure at Cabo Delgado, the face of Afungi has already been altered. Over the course of two years of works, the subcontracted companies and oil and gas enterprises have kept 5,000 workers on the ground, according to the Area 1 consortium.
Besides civil construction and associated work, the tasks associated with the sector itself have been assigned to TechnipFMC, Oceaneering International, Advanced Technology Valve, Cameron Italy, VanOord and a consortium bringing together McDermott, Chiyoda and Saipem.
Included within these works is the installation of tens of kilometres of pipeline on the sea floor that will pump natural gas from the reserves directly to land. Everything is going ahead despite armed attacks claimed by Islamist militants that have cast a dark cloud over rural areas of Cabo Delgado.
While Area 4 hasn’t yet announced its final investment decision, the consortium made its decision on initial investment in October and announced the assignment of engineering, acquisition and construction tasks to a consortium consisting of firms JGC, Fluor and Technip FMC. Peter Clarke, vice-president of ExxonMobil, one of the leading members of the Rovuma LNG consortium, which operates in Area 4, confirmed that the initial investment is budgeted for $500m and suggested 2025 as the year for production to go ahead. In the same ceremony, the Mozambican government endorsed Area 4’s 15.2mtpa sales contracts.
A yet-to-be-decided portion of LNG production resulting from exploration in the Rovuma basin will be destined for industrial projects in Mozambique. Three have been approved so far. These are a fertiliser factory owned by Norwegian company Yara, a fuel refinery operated by Anglo-Dutch company Shell and a third project run by GL Energy Africa, a British company, which will convert gas into electricity.
Several prospecting operations are being prepared after Mozambique granted licences at the end of 2018. Eni leads one consortium (34%), together with Qatar Petroleum (25.5%), South Africa’s Sasol (25.5%) and Mozambican state company ENH – Empresa Nacional de Hidrocarbonetos (15%), which was assigned prospect block A5-A, an area spanning 5,133 sq km with depths ranging between 300 and 1,800 metres, in completely unexplored offshore territory opposite the district of Angoche, central Mozambique.
Meanwhile, ExxonMobil holds half of another prospect consortium featuring Mozambican state company ENH, with 20%, Russia’s Rosneft with another 20% and Qatar Petroleum with 10%. Contracts cover three offshore blocks: Angoche A5-B, Zambeze Z5-C and Zambeze Z5-D.
On land, South Africa’s Sasol will carry out prospect operations in area PT5-C, covering 3,000 sq km in the centre of the country in the Pande-Temane area, Inhambane province, from which it has already extracted 1.8 trillion cubic feet of natural gas since 2004, with the majority largely directed towards South Africa via pipeline.
In this same region, Sasol is pressing ahead with exploring the Inhassoro reserves in order to produce 5,000 barrels of light oil per day. “Initial estimates suggested a higher production volume”, however, it will end up being “a small-scale yield”, stated Zacarias. “We still don’t have refineries in the country.” This means output will either be destined for the production of cooking gas or for export, he added. The reserves will be explored in accordance with a plan put forward in 2015.
Source: Africa Business Magazine

The African Development Bank and the World Bank have clashed over the latter's comments on lending to African countries.
World Bank President David Malpass on Monday said that some development banks such as the African Development Bank were making already challenging bad situations worse by lending easily to heavily indebted countries.
Malpass was speaking at the World Bank-International Monetary Fund debt forum in Washington where he cited the Asian Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development as the main culprits contributing to debt problems.
Nigeria and South Africa were mentioned by the World Bank president as countries that have suffered AfDB 'easy lending'.
The AfDB has refused to take the comments lying down saying that the comments are inaccurate, not based on fact undermines the bank's governance systems.
In a statement, the AfDB argued that it was actually World Bank that has a higher debt exposure on the African continent.
"The World Bank, with a more substantial balance sheet, has significantly larger operations in Africa than the African Development Bank. The World Bank's operations approved for Africa in the 2018 fiscal year amounted to $20.2 billion, compared to $10.1 billion by the African Development Bank," AfDB said in a statement.
With regard to Nigeria and South Africa, the World Bank's outstanding loans for the 2018 fiscal year to both countries stood at $8.3 billion and $2.4 billion, respectively. This was in comparison to AfDB's $2.1 billion (Nigeria) and $2.0 billion, (South Africa) for the same fiscal year.
AfDB said that the World Bank ought to have explored other available platforms to discuss debt concerns among Multilateral Development Banks before blaming them for further fueling the debt crisis.
"The general statement by the President of the World Bank Group insinuating that the African Development Bank contributes to Africa's debt problem and that it has lower standards of lending is simply put: misleading and inaccurate," the AfDB statement read.
Source: New Times:

Manufacturers and dealers of some single-use plastic products have appealed for more time so they can adjust and avoid financial losses.
There are about 20 single-use plastics banned in Rwanda.
Wholesalers, retailers and consumers were given a three-month grace period in October last year to stop using single-use plastic products while factories that produce the banned products were given a two-year grace period.
Now, manufacturers have requested that the grace period be extended for wholesalers, retailers and factories to get alternatives without incurring losses.
Anitha Urayeneza, the Managing Director of NBG Ltd that produces straws in Gasabo District, told The New Times that she invested Rwf250 million to start the factory three years ago and added that until now she has not yet paid back a loan she acquired.
"I have not yet started to really make tangible profits since I have not yet even finished paying back the bank loan. It requires me at least three years to finish paying back the loan. This means if straws are banned in wholesalers and retailers now, I will have no market in the two-year grace period that runs out in 2021.
I think a 5-year grace period is better for manufacturers like me to pay back the loans we acquired from banks and find alternatives to single-use plastics," she said.
Urayeneza added that if she gets at least five years, she could be able to switch from environment polluting straws to producing environmentally friendly straws, which need at least Rwf600 million because it would mean using new machines and technology to produce the straws.
The company employs 30 permanent workers who could lose jobs if it is not facilitated in transition. It has been producing at least 1,000 boxes of straws per day.
One box contains 12 packs of straws while one pack contains 200 straws. This means the factory produces 2.4 million straws per day.
She said that if the grace period is extended, they will set up mechanisms to collect the straws and supply them to recycling companies.
"Some companies can recycle them into pavers, sacks and they are already collecting them for recycling".
She emphasised that factories, wholesalers and retailers should be given more grace period to empty products from stores.
"You cannot tell a wholesaler to stop the business and then tell the factory to continue operating for two years. Where can we sell the products?" she said.
The New Times visited different shops and supermarkets in Kimironko and found single-use plastic products in stores.
Jean-Paul Kamali, who sells single-use plastic items at Simba supermarket, Kimironko branch said: "I suggest they extend the deadline to empty the stores since most of us were not aware of the deadline. The other thing is that local manufacturers and importers should first be targeted to stop producing and supplying to us. If they stop, we will empty products we already have from our stores and then totally stop trading in these products," he said.
A pack of 200 plastic straws at Simba Supermarket costs Rwf700, a pack of single-use plastic knives stands at Rwf1,800, while a pack of 25 single-use plastic plates goes for Rwf2,000.
There were also forks, cups and items.
"We can totally stop if they are no longer produced and supplied to us," he said.
Emmanuel Turatsinze, who owns a shop in Kimironko, added that he sells over 20 packs of plastic straws per week.
However, he reiterated, "I heard last year that they could be banned and I thought it would take like a year. But if factories and importers stop supplying, we will also stop. What we need is to supply us the alternatives or products that are environmentally friendly so that we continue to serve clients."
Source: New Times

THE annual banks' credit to agriculture sector grew by 90.1 per cent in the year ended December 2019 compared to negative 16.0 per cent in the corresponding year on account of government measures to improve business environment.
The Bank of Tanzania (BoT) monthly economic review January shows that lenders' appetite to agriculture sector is high than in other sectors namely building and construction as well as mining and quarrying.
"The central bank's accommodative monetary policy and measures to improve business environment have played key role in increasing commercial lenders appetite to agriculture sector," stated the report.
Commercial lenders positive attitude towards agriculture sector is welcomed and according to analysts would yield huge impacts to the country's economy.
The credit flow to agriculture sector is set to increase as long as most commercial lenders for efforts to de-risk agricultural finance by addressing both individual and systematic risks.
Most commercial lenders have for years regarded agriculture sector as a high risk business to lend, leaving it financially underserved.
The increased lending will bring about huge impact to the agriculture sector that employs about 70 per cent of the country's workforce and contributes at least 30 per cent of the Gross Domestic Product.
During the period under review, the composition of credit outstanding to agriculture expanded by 9.5 per cent from 9.4 per cent in the corresponding period 2018.
Other sectors that registered strong annual growth rate of banks credit apart from agriculture are building and construction 72.6 per cent compared to negative 23.2 per cent of the corresponding period 2018.
Banks' credit to mining and quarrying grew by 13.2 per cent in the period under review compared to 28.2 per cent in the corresponding period.
Also banks' credit extended to personal grew by 9.3 per cent compared to 54.0 per cent of the corresponding period 2018. The banks' credit to manufacturing sector grew by negative 0.8 per cent compared to 17.5 per cent in 2018.
Credit to the private sector recorded an annual growth of 11.1 percent in December last year compared with 4.9 percent in the corresponding period 2018.
The sustained growth of credit to the private sector is supported by the accommodative monetary policy and ongoing measures implemented by the government to improve business environment.
During the reference period, domestic credit by the banking system grew by 6.2 percent in 2019 compared with 10.1 percent a year earlier.
The slow growth was attributed to the decline in credit extended to the Government, largely due to buildup of government deposits at the BoT following increase in revenue collection and streamlined expenditure.