Current Trade News

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.

Patchy rainfall in Malawi’s tobacco fields signals a difficult harvest season ahead for the farmers gathering the country’s “green gold”, but even greater storms could be about to break over an industry coming under increased international pressure to reform its child labour practices.
Tobacco accounts for 11% of the country’s GDP and more than 60% of its export earnings, but the low prices that farmers receive from dealers mean many are highly reliant on child labour, a practice that deprives children of their education and ultimately fuels the cycle of poverty. The International Labour Organisation (ILO) sets the minimum age for employment at 14 in less-developed countries.
On 1 November 2019, the US restricted imports of tobacco from Malawi. Its Customs and Border Protection (CBP) agency issued a withhold release order on tobacco and products containing tobacco from Malawi, meaning that the products will be detained at all US ports of entry. In a statement, the agency said that the action was taken on the basis of information that “reasonably indicates the tobacco from Malawi is produced using forced labor and forced child labor”.
Companies that can offer proof their products are not made in whole or part by child labour or other forced labour will still be able to import their produce, but such restrictions will undoubtedly have an impact on tobacco growing in Malawi.
Law firm threatens action
In a separate development at the end of October 2019, London-based law firm Leigh Day announced that it was preparing a class action on behalf of thousands of Malawian children and their families to demand compensation from British American Tobacco (BAT), one of the world’s largest cigarette makers, for “unjust enrichment” from the alleged use of child labour in the country.
In a statement, the firm said that it had sent a pre-action letter to BAT, and that if no satisfactory response were received it would take action in the High Court. It said that the children and their families accuse BAT of making huge profits from leaves picked by tenant farmers who are “effectively forced to work for very little pay under fear, duress and false pretences”.
Local dealers buy the tobacco and sell it on to the big firms such as BAT, and the latter, says Leigh Day, effectively determine the price. The law firm asserts that the tenant farmers receive so little for their produce that they have “no option but to rely on their children to work”. In the last season, it says, “total earnings were on average no more than £100 to £200 [$130-$262] for the work of a family of five for 10 months”.
The statement alleges that the children do “gruelling” work, often for 10-12 hours a day, which regularly prevents them from attending school. They do “much the same work as the adult farmers including building ridges for planting, harvesting tobacco leaves, applications of toxic pesticides and bundling tobacco leaves”.
Were the case to come to court and the judgment go against BAT, it would have a big impact on the situation in Malawi: “If a high court rules that BAT is responsible for the wages and conditions in their global supply chain, it will be forced to adopt higher standards and hopefully others will follow suit,” Human Rights Watch senior researcher Margaret Wurth told the Daily Telegraph of London in November.
Farmers too poor to hire workers
Farmers who spoke to African Business bear out Leigh Day’s assertion that they are too poor to hire extra hands due to the low selling prices of Malawi’s leading cash crop. But they are nonetheless apprehensive about the consequences of the international pressure.
A tenant farmer from a small district in the central region, Johnson, 53, fears lower selling prices as the industry comes under global scrutiny. Given the US restrictions, he is unsure of what price to expect from the local merchants. Low prices and tighter labour rules could dent his earnings when the main tobacco-marketing season begins in April.
“I have a target I can meet if we get more rains, but if the buyers want my tobacco for cheap it will be very hard. Farmers are always fighting for better prices, but now if buyers reduce the price of my product or they refuse it because of children working then how will I live? ””
Johnson works on a small plot with his wife and his five children, who work when they’re not in school. He says that he can’t afford to pay labourers for the 10 months of the year spent on farming tobacco so he relies on his family for support.
“This is how we survive as a family,” he says. “This is how my children go to school and I don’t think I could find the money to pay extra people to help me. The [selling] prices are low so if anybody was to dig my field, how much would I pay them?”
BAT rebuts allegations
London-listed BAT, which Leigh Day says acquires tobacco from between 20,000 to 35,000 farms in Malawi, says that it expects dealers from whom it buys tobacco to comply with an international code of conduct that prohibits the use of child labour and marketing tobacco to anyone under 18.
Simon Cleverly, group head of corporate affairs at BAT tells African Business that the company has a strict policy against forced and child labour which applies to employees and suppliers: “British American Tobacco takes the issue of child labour extremely seriously and strongly agrees that children must never be exploited, exposed to danger or denied an education. All our policies and standards on child labour are aligned with ILO convention 138 on minimum age.”
Towards a solution?
Malawi’s minister of agriculture, Kondwani Nankhumwa, says that the government is making efforts to eliminate child labour. “There are only pockets where this happens,” he tells African Business. “Government is making efforts to create some conformity and order.”
According to the 2015 National Labour Survey, child labour prevalence is at 38%, mainly in tobacco and tea farming. To curb the use of minors under 14, Malawi’s minister of labour, Martha Chanjo Mhone, says the government plans to increase its capacity in conducting routine inspections on tea and tobacco farms.
However, Sheila Chikonde, the wife of a tobacco farmer, doubts the effectiveness of the plans. “I don’t know how inspection will help us. If we could plant different crops so we have something to sell all year then maybe our children would not have to work so hard in the farms and get sick. It would be better,” she says.
Source: African Business

28/01/2020 - Kenya's tea export earnings drop 16% in 2019 on low prices
NAIROBI (Reuters) - Kenya's earnings from tea exports dropped by 16.4% last year to 117 billion shillings ($1.16 billion) as production edged down and average prices of the commodity slid, the industry regulator said on Friday.

The East African nation, which is the biggest exporter of black tea in the world, produced 458.85 million kilograms of the crop, down 6.95% from the previous year, the regulator Tea Directorate said in a report.

"Lower earnings were attributed to low auction prices," the regulator said. The average price of Kenyan tea fell to $2.21 per kilogramme during the period, from $2.58 per kg a year earlier, the Tea Directorate said, attributing the drop to an oversupply.

Production is likely to increase marginally this year along with export earnings, it said. Some of the main buyers of Kenyan tea include Pakistan, Egypt and Britain.
Source: Reuters.

MAIZE and groundnuts farmers have been warned on unsafe levels of aflatoxin in crops, a poisonous fungus that threatens their livelihoods and the health of consumers as it may cause cancer.
Addressing members of the Parliamentary Committee on Trade, Industry and Environment in Dodoma yesterday, Tanzania Trade Development Authority (TanTrade) Director-General Edwin Rutageruka said the country's export potential of groundnuts into European and Asian markets have been hampered by the deadly carcinogenic fungus found in the food crops.
Medical and expert studies have suggested that aflatoxin, a well-known toxic chemical produced by a common fungus in soils and crop debris, attacks maize and peanut crops in the field, during harvest and grows to the storage.
The food crops remain unsafe for consumption regardless of the volume of heat during cooking or roasting. Contaminated maize or groundnuts fall below the international market standards for food safety and consumers are prone to liver diseases, especially cancer and lethal poisoning.
At lower levels, it also causes lowered immunity and irreversible stunting in children.
Livestock that consume contaminated feed are also affected, and dairy animals consuming contaminated feed can pass aflatoxins in their milk to young animals or humans.
He said although the government had held some countless operations to train farmers and extension officers, locals still exercise traditional means of drying crops.
"Even if we are to go to Kibaigwa International Grain Markets you will find people drying their crops on the bare ground," Rutegeruka said. It is believed that when farmers dry their foods on the bare ground it increases the risk of moulds.
Experts suggest that mould species like Aspergillus Flavus and Aspergillus parasiticus grow on foods producing aflatoxins to contaminate the crops.
"We can only say we have effective immune but results from global laboratories shows the crops are unacceptable and unsafe."
He said the authority has recruited over 30 personnel charged with market intelligence to guide farmers and businessmen to produce based on market quality and quantity demands.
Deputy Chairperson of the Committee, Rtd Col Masoud Ali Khamis wanted the authority and the government to resolve challenges limiting local manufacturers from accessing foreign markets.
The committee observed that a number of industries have a large stock with no hope for the domestic market. He said this requires appropriate actions to ensure producers get a permit for exports.
"We are also urging the government to consider such products that are not within the regional market integration to impose such heavy import duties as an alternative to allow a conducive market for locally produced goods," he said.
Last year, scientists at the International Institute of Tropical Agriculture (IITA) announced their breakthrough of Aflasafe, a natural solution of four fungal strains to fight aflatoxin.
They had commissioned trials in Morogoro, Dodoma, Mtwara and Manyara regions with support from the US department of agriculture at the USAID-Tanzania.
It is estimated that about 670million US dollars are lost annually in Africa to Aflatoxin infections on cereals, grains, and legumes.

Kenya stands to gain considerably from the UK-Africa Summit both financially and in development projects.

On matters trade, it may go some way to close the negative trade balance between Kenya and the UK. In 2018, Kenya exported £237.5 million worth of goods to the UK and imported goods worth £303.6 million.

If the country can secure markets for Kenyan cotton and textiles and incite an appetite for its minerals it could be possible to close this trade gap.

Other direct investments could boost the economy and create job opportunities in pharmaceuticals and service industries.

The largest tax paying company in Kenya, Safaricom PLC, also enjoys a large UK investment from Vodacom.

Increased investment from a pharmaceutical company such as Glaxo-SmithKline for research into tropical diseases and development of new medicine could result in job creation.

One of the areas where UK expertise is being highly sought in Kenya is the energy sector, especially in renewable and green energy.

Kenya has made major investments in solar, wind and geothermal energy, but more needs to be done in order to reduce reliance on fossil fuels and hydroelectricity to run the industrial sector.

As the Brexit deadline looms large for the UK government and British businesses, new markets for UK goods and sources of raw material for its manufacturers have become a priority.

As new tariffs could be placed on goods leaving and entering the UK, cheaper and more business-friendly environments are becoming important for the survival of the UK post-Brexit.

UK banks could also see limited freedom of operations in Europe in a few months. Kenya could be the likely base for experimenting with financial service trade between the UK and Africa.

The success of mobile-money platforms such as M-Pesa adds credence to its claim as the first stop for investment and operations of these services by UK-owned banks some of which already enjoy stable operations in Kenya.