Current Trade News

THE country lost more than 60 000 livestock to drought-induced famine this year, agriculture minister Alpheus !Naruseb has said.
!Naruseb announced the figure during a consultative meeting prime minister Saara Kuugongelwa-Amadhila had with regional governors and chief regional officers last Wednesday.
Without mentioning the exact numbers of livestock that have perished per region, the minister said the Kunene, Omusati, Oshana, Oshikoto, Erongo and //Kharas regions recorded the highest number of livestock lost due to the current drought.
Addressing the meeting, Kuugongelwa-Amadhila said so far N$131 million has been spent on drought relief, with N$16,6 million spent on fodder for livestock.
She said of the N$595,2 million earmarked for the drought relief programme, N$112 million will be spent on fodder procurement.
"The challenges related to reliance on conventional grazing of animals during this drought has alerted us to the need to adopt more innovative and drought-resilient methods," she said.
The prime minister further noted that the government acknowledges the introduction of the hydroponic system, which produces fodder in seven days and could feed many cattle. It has therefore approved a subsidy scheme to support small-scale farmers who want to venture into non-mechanized fodder production.
The government also plans to train farmers in hydroponic fodder production.
"I urge our farmers to approach the ministry of agriculture offices to participate in the scheme," she said.
The state of emergency declared for the drought was set to lapse on 5 October 2019, but Kuugongelwa-Amadhila on Wednesday said she would table a motion in the National Assembly to have it extended for another six months.

Côte d’Ivoire came first out of 66 countries for having the greatest potential for future growth, according to Standard Chartered’s Trade20 Index.
Kenya ranked third and Ghana thirteenth, based on metrics such as economic dynamism, trade readiness and export diversity.
Researchers found that while existing trade powers like China and India continue to rapidly improve their trade potential, African countries such as Kenya and Côte d’Ivoire have cemented their positions as East and West African trading hubs from a relatively low starting point.
Huge investments in infrastructure, e-commerce and ease of doing business have also started paying off in Côte d’Ivoire and Kenya where the business environment has seen a marked improvement.
Côte d’Ivoire and Ghana also performed well for economic dynamism, measured in terms of foreign direct investment, export and GDP growth. Côte d’Ivoire enjoyed robust GDP growth at 7.4% in 2019, while exports also grew during the ten-year period.
FDI flows to Kenya, one of the largest recipients of foreign investment in Africa have also grown 27% since 2010, with the rise in investment coming mainly from China in the mining and hydrocarbon sectors, according to UNCTAD.
Home to some of the world’s fastest-growing economies, Africa has the potential to become a much bigger player in global trade, says Standard Chartered’s Regional Co-Head Saif Malik.
“Already connected with the trading powers in Asia, particularly China, through the Belt & Road Initiative, and with the launch of the African Continental Free Trade Area, we see numerous growth opportunities for trade and investment in the years ahead.
“Additionally, the growing young, digitally-savvy population and an increasing female workforce will aid the continent in its economic transformation.”
While most traditional trade indices are based on a market’s present performance, the Trade20 index captures changes over time to reveal the markets that have seen the most improvement within the last decade.
The Trade20 index
1. Côte d’Ivoire
2. India
3. Kenya
4. China
5. Ireland
6. Vietnam
7. Indonesia
8. Thailand
9. Oman
10. UAE
11. Hong Kong
12. Russia
13. Ghana
14. Sri Lanka
15. Bahrain
16. Singapore
17. Switzerland
18. Chile
19. Turkey
20. Philippines

Source: African Business Magazine

The new African continental free trade deal (AfCFTA) presents a unique opportunity to grow intra-Africa trade as a proportion of total African trade, and to diversify the continent’s exports to the rest of the world.
Coming at a time when Africa is poised to become a hotspot for global growth, boasting six of the fastest growing economies in the world, the trade area will ensure that African countries are able to maximise the benefit of this growth by becoming suppliers of various goods and services across the continent.
The trade agreement is the biggest of its kind since the World Trade Organization was established in 1994, and represents the most monumental step Africa has taken towards regional economic integration to date.
What’s new?
As communicated at the launch, the agreement will be fully supported with well-defined rules of origin; schedules of tariff concessions in trade in goods; an online continental non-tariff barrier monitoring and elimination mechanism; and a Pan-African digital payments and settlement platform as well as an African Trade Observatory portal.
The AfCFTA has the potential to boost intra-Africa trade to much higher levels, to the benefit of the continent’s economic ecosystem.
Intra-Africa trade currently remains low compared to other global regions, amounting to an average of 15% of global trade across both imports and exports as of 2017. With customs procedures eased under the CFTA, intra-Africa trade is expected to grow to 21.9% by 2022 and at least 53% by 2040, effectively contributing in the region of $70.0 billion to the continent’s GDP. This growth will ensure that an increasing proportion of Africa’s more than US$2 trillion economy is traded internally.
Trade financing gap
To support the expected increase in intra-Africa trade of $119.6bn by 2022 will require nearly $40 billion in trade financing alone. This is a big challenge for African banks in particular.
There was already a trade-financing deficit of at least $90 billion in Africa as of 2018, according to African Development Bank estimates.
African banks, especially regional banks like Absa Group, Standard Bank and Ecobank, will need to adopt new ways of assessing trade risks in order to support corporates as they look to capitalize on the new era of growth and trade opportunities.
Experience warns this will be crucial, as strong regional banks have proven vital to progressing intra-regional trade in other areas of the world.
Given South Africa’s anaemic economic growth over the past few years, as well as its persistently high unemployment rate, the timing couldn’t be better – in addition to hopes of broader and deeper regional economic integration, AfCFTA will specifically open up new markets for South African exporters.
Because of its sophisticated economy and comparatively more established industrial base, South Africa will be in a unique and advantageous position to grow and diversify its exports to the rest of Africa, as trade and tariff and non-tariff barriers are eventually relaxed or removed entirely.
AfCFTA is expected to increase regional value chains, enhancing opportunities for goods and services consumed in Africa to be produced and manufactured there too.
Land of opportunity
The rest of the continent already receives the second largest and fastest growing share of South African exports after Asia, at 26.2% in 2017. Yet just 9.9% of imports hailing from the continent are destined for South Africa.
The pattern follows from South Africa’s distinct position as Africa’s most industrialized economy – its exports to the rest of the continent are mainly manufactured goods (84% in 2017), in contrast to its Asian exports, a majority 59% of which are minerals.
When it comes to imports however the pattern is largely reversed, with the majority of South Africa’s imports from the rest of Africa (51%) being minerals, mainly crude oil from Nigeria and Angola.
The removal of tariffs and other constraints will benefit South Africa on this side of the ledger too. By enabling other African countries to develop their manufacturing capacity in line with their inherent competitive advantage, the agreement will also help South Africa reduce its dependency on expensive manufactured imports from regions further afield such as Europe and Asia.
Growth aside it is also expected that the AfCFTA will help diversify South Africa’s export destinations within the continent, given that more than 85% of South Africa’s exports to Africa are destined for the Southern Africa Development Community (SADC) and concentrated in just a handful of countries.
Exports to the other two largest economies in sub-Saharan Africa, Angola and Nigeria, together accounted for just 4.3% of South Africa’s total exports to the rest of Africa in 2017.
Additionally, and partly in response to the growing risk of global trade protectionism, South Africa will increasingly prioritize the development of its trade with the rest of Africa, a goal laid out in the 2018/19 Industrial Policy Action Plan and the National Development Plan (NDP).
Maximizing gains
As it is with any agreement involving many different countries, the key will be in implementation and the speed of execution.
There is no doubt that some elements of the AfCFTA will erode member governments’ powers to design and implement national policies, in the process reducing the politicians’ powers to influence electoral results in their own countries.
There will have to be a willingness to lose in the short term in order for the continent to benefit through increased intra-Africa trade and bigger markets in the medium and long-term.
The continent will also have to make sure that the benefits are not only felt in bigger economies such as South Africa, Nigeria, Egypt, Angola and Kenya if it wants to avoid its own “Brexit” from some of the countries as the agreement matures.
This will require a careful balancing between opening markets up and protecting smaller players. At the end of the day, the AfCFTA’s success will boil down to political will, discipline in execution, and the active management of conflicts that arise as implementation continues.
Source: African Business Magazine

A CHINESE cement giant, Huaxin Cement Co. Limited is set to acquire Kenya's ARM Cement's Maweni Limestone Limited in Tanzania to open doors for the top global cement maker into the lucrative local cement industry.
The Chinese firm, among leading cement companies in China and reportedly among the top ten cement companies in the world in terms of capacity and revenues, has signed agreement to buy 100 per cent shares of the Maweni Limestone Limited for 116 million US dollars, subject to regulatory approval.
The agreement is expected to pave the way for the Huaxin immediate entry into one of the leading markets in East Africa which is integral to their broader strategy to expand its footprint across emerging markets, according to a statement issued yesterday.
"We are very pleased that we were able to sign this Agreement. Tanzania is an important cement market in East Africa and MLL's operations are important for our ambitions in this market," the Vice- President of Huaxin and Head of Huaxin's international business, Xu Gang, is quoted as saying in the statement.
"We are looking forward to improving MLL's competitive position in the Tanzanian market with a state-of-the-art operation, creating value for its customers, suppliers, employees and other stakeholders and contributing to the development of Tanzania."
A Joint Administrator for ARM Cement, George Weru, said the transaction marked a crucial step for the delivery of their mandate as Joint Administrators of ARM Cement to realize value for the creditors, ensure continuity for the business and its suppliers and in the process safeguard the jobs of its employees through a going concern sale.
Wuhan-based Huaxin was founded in 1907 and operates today more than 200 plants with annual capacities of 100 million tons of cement, 24 million cubic meters of concrete and 25 million tons of aggregates.
It has 17,000 employees and generated revenues of USD 4bn in 2018.
In recent years, Huaxin expanded into the emerging markets of Tajikistan and Cambodia and is currently expanding into Uzbekistan and Nepal with greenfield projects.
ARM Cement Limited, formerly Athi River Mining Limited, was placed under administration last year after failing to meet its creditor obligations.

Africa now has the world’s second fastest growing tourist industry as travel to the continent becomes cheaper and easier, while governments drive business tourism with new initiatives.
Travel and tourism remained a key driver of the African economy in 2018, accounting 8.1% of GDP, and contributing $194.2 billion to the region’s economy, a new report by African e-commerce company Jumia found.
The region’s tourism industry grew at a rate of 5.6% in 2018, second only to Asia Pacific, according to Jumia’s 2019 Hospitality Report. This compares to a global growth rate of 3.9% annually.
Around 67 million tourists flocked to Africa in 2018, a record 7% increase from 63 million arrivals in 2017 and 58 million in 2016.
From the souks of Marrakech to the quaint vineyards of the Cape, the top African tourist spots were Morocco and South Africa, with around 10 and 11 million arrivals per year.
More relaxed visa rules in Ethiopia coupled with improved transport infrastructure gave their tourist industry a staggering 48.6% boost in 2018, raking in a total of $7.4 billion.
The majority of foreign visitors were holiday-makers with 71% of tourist spending across the continent spent on leisure activities.
A new itinerary
The report also attributes burgeoning tourism numbers to a slew of government initiatives, especially in Kenya, Rwanda and South Africa to drive business tourism to the continent.
These include tourism development strategies such as MICE, where countries arrange events such as meetings, incentives, conferences and exhibitions to attract international business.
Yet Africa as a whole still occupies only a small slice of the international tourism market accounting for 62.9m (or about 5.1%) of the 1.2bn global tourism arrivals in 2016, according to a separate report by the Africa Tourism Monitor compiled by the African Development Bank.
As hotels cancel deals for new developments and ‘clean their pipelines’, the hotel development industry is also slowing down, with pipeline activity dropping to 276 hotels with 45,861 rooms in 2019, down from 418 hotels with 76,322 rooms in 2018.
Flying South
The airline making the most money in African skies was flagship UAE carrier Emirates, which earned over $837 million in 2018 with popular flights from Johannesburg, Cairo, Cape Town and Mauritius.
The most lucrative air route between April 2018 and March 2019 was from South Africa’s largest city Johannesburg to Persian Gulf hub Dubai, which generated $315.6 million in passenger revenues.
During the same period state-owned Angola Airlines and South African Airways were the only two African airlines making the top 10 most profitable air routes in Africa.
Top performing air routes from Luanda to Lisbon earned a cool $231.6 million, while flights from Cape Town to Johannesburg generated $185 million, the report said.
As countries scramble to grab a greater share of the intra-African tourism market, the dawn of Africa’s free trade agreement will give domestic travel a much-needed boost.
Realizing the full potential of Africa’s continental free trade area (ACFTA) requires cooperation from all industry players, says Jumia’s Head of Travel Estelle Verdier.
“Governments have to be willing to eliminate visa requirements for African nationals traveling to their countries.”
“Ministries and other responsible partner organizations should create campaigns that will promote their local travel destinations and tourism offerings to attract more regional travellers,” she adds.
That said, African governments have come a long way in making intra-continental travel easier and more affordable.
Initiatives such as the creation of the East Africa Visa programme allowing travellers to apply for a visa online before visiting Uganda, Rwanda and Kenya are making these places evermore attractive to tourists, South African Tourism’s Acting Chief Executive Officer Sthembiso Dlamini said.
“Such collaborations are visionary. It is when we work together, pool our resources, partner and share our best knowledge that we can do much more. “
Source: African Business

Since the 1970s, the World Economic Forum had measured the competitiveness of the world’s economies through its Global Competitiveness Report, provoking a frank overview of the performance of nations and spurring a robust debate among policymakers.
By 2004, that research had been synthesized into the Global Competitiveness Index (GCI), a tool which ranks nations alongside their peers based on twelve pillars of competitiveness, from institutions to innovation, and grants them an overall score out of 100.
Last year, WEF introduced a new methodology to the Index which strengthens the importance of “the role of human capital, innovation, resilience and agility” in the context of the technological changes prompted by the Fourth Industrial Revolution.
Unfortunately, the new methodology has not dramatically led to an improvement in Africa’s performance. With an average score of 46.2, sub-Saharan Africa has the lowest GCI score among all regions, and demonstrates the weakest average regional performance in 10 out of 12 pillars. In only five pillars does the average score exceed 50 – including in labour market (53.8), product market (50.4) and business dynamism (50.1).
Despite years of positive headlines about Africa’s economic rise, Thierry Geiger, head of research and benchmarking at the WEF, says that Africa’s performance leaves much room for improvement.
“Africa is very diverse but diverse in the bottom of the rankings. You have quite a big spread across African nations, but none of them is up there.
Among the 148 economies we cover, if we filter sub-Saharan Africa, you have Mauritius at 49 and then South Africa at 67, barely in the top half of the ranking. You find most sub-Saharan Africa nations beyond the 100 mark, all the way [down] to 148. So it’s quite weak in general, and even with the largest countries, if you look at Nigeria (115) South Africa (67) and Angola (137), there is room for improvement.”
Regional disparities
Nevertheless, regional disparities are evident. Mauritius, sub-Saharan Africa’s best performer, is nearly 30 points and over 91 places ahead of Chad. Southern African countries have achieved a relatively higher competitiveness performance (48.0) compared to East Africa (46.8) and West Africa (44.5). In ICT adoption, skills and financial systems, Southern Africa performs on average 8.3, 8.9 and 8.7 points higher than in West Africa.
And yet despite a new methodology that reflects the importance of technological change, a common lesson that can be drawn is that African countries continue to be hobbled by a lack of traditional development – whether basic infrastructure investment, skills development or the performance of institutions. Even a relatively high performer like South Africa is held back by health (43.2, 125th ranked) and security (43.7, 132nd ranked).
“The root causes of slow growth and inability to leverage new opportunities offered by technology continue to be the ‘old’ developmental issues – institutions, infrastructure and skills. Notably, the disappointing economic performance of most Sub-Saharan African countries is more attributable to weaknesses in these areas than in any others, and the much-vaunted economic leapfrogging will not happen unless these issues are addressed decisively,” says the report.
Geiger argues that the basic factors of health, skills, good governance and financial prudence require attention.
“Across 12 pillars of competitiveness, on average it is the worst region with major weaknesses in the basic enablers or drivers of competitiveness, including security, rule of law, red tape, corruption. We know that inflation or too much debt shapes the business and investment environment.”
Unsustainable levels of public debt are a particular concern, with the average public debt-to-GDP ratio in sub-Saharan Africa increasing from 32.4% in 2014 to 45.9% in 2018. That “raises serious questions about the sustainability of private debt, with impending consequences for the attraction of private investments and the availability of public capital necessary to develop infrastructure, improve the education system and provide social services,” according to the report.
Technological change
Yet despite traditional weaknesses, innovation and the potentially exciting transformations of the Fourth Industrial Revolution can still play their part in the continent’s future, according to the report’s authors. Kenya is developing into a strong innovation hub comparable to South Africa and Mauritius. Some of the continent’s improving metrics “herald the possibility to leapfrog, by more adeptly tapping into digital business models and private sector development,” says the report.
Yet with less than half of the adult population connected to the internet and subscriptions to broadband extremely low in most of the region’s economies, basic infrastructure and digital skills development need to happen to realise its potential. Geiger says that technology will play an increasingly important role – but warns that it will not be a panacea for all of the continent’s woes.
“We see double-digit growth in technology use but from such a low base. We know about Kenya and Rwanda, but when you look at the average of the continent it’s still very low and it won’t solve all the issues. We know bad governance cannot be undone by technology alone – yes, it helps if you are more efficient and digital, with less room for corruption and more accountability. But you can always find ways to steal from the coffers. We see technology in Africa is not delivering growth and access to services at a scale that would be transformative.”
Given the relatively muted performance, what positives can African policymakers take from the report? Geiger says that the report provides a useful starting point to assess priorities.
“We tell them, here’s where you stand, forget about your peers, it’s not a race. It’s not zero sum. It helps to define priorities. We do it with humility and start a conversation. We go to [policymakers] with the score, the pillars and the subcategories, and that’s when we have meaningful conversations with governments and the private sector. We don’t venture into the recommendation space. It’s a starting point.”
Furthermore, Geiger acknowledges that competitiveness is not the be-all and end-all for a country.
“We do acknowledge inequality is an issue to be addressed at the same time as growth. Being competitive will not solve the other issues of inequality, or a lack of social mobility. It’s part of a broader conversation around good growth and development.”
Source: Africa Business Magazine