Current Trade News

On November 4th, 2020, the United-Kingdom based public health organization Knowledge Action Change, which aims at promoting health through the concept of harm reduction, issued an expert report entitled: Burning Issues: The Global State of Tobacco Harm Reduction. In parallel, the organisation hosted two discussion sessions about the state of tobacco harm reduction in the world.
The first session dealt with 'The context and importance of tobacco harm reduction for global health' and the second one 'The current challenges for tobacco harm reduction'.
It was apparent from these discussions that Tobacco Harm Reduction is a very sensitive topic. Several studies have shown over the years that innovative smokeless tobacco products cause potentially less harm than traditional cigarettes. However, many voices are against these supposedly safer products (on the frontline the World Health Organization) considering that they are still harmful and dangerous especially for the youth.
For the experts who advocate in favor of Tobacco Harm Reduction, it is a critical public health issue and the most important thing is to meet consumers where they are regarding their addiction and offer them the best option to live longer and prevent suffering. Most experts have noticed over the years that quitting smoking, although it remains the best option, can be an unachievable goal for many smokers. As a consequence, intermediary solutions have emerged such as e-cigarettes, heated tobacco, pasteurized tobacco. It is notable that a couple of independent scientific studies, such as the one led recently by Public Health England recently, show that e-cigarettes are "95% less harmful than cigarettes".
What are the challenges in low and middle-income countries?
In low and middle-income countries (LMICs), regulations, policies and information around Tobacco Harm Reduction (THR) are particularly restrictive. Dr. Mwawi Ng'oma is the Programme Manager of St John of God College of Health Sciences. She is a professional nurse specialized in mental health in Malawi. She stated that to her there is no doubt that current policies and regulations are counterproductive and lead to more confusion and misinformation: "Governments policies and regulations are being unduly influenced by flawed science and anti-harm reduction lobbying. Also, flawed public health information in many countries is confusing and misleading people who want to switch away from smoking but are not aware of the available options".
She added: "Many LMICs are not sufficiently resourced to implement and adopt tobacco harm reduction measures. The situation is further complicated in countries where the economy is reliant on income from cultivation, such as Malaw)".
Samrat Chowdhery is President of the International Network of Nicotine Consumer Organizations, and Director of the Association of Vapers, India. Mt Chowdhery is of the opinion that harm reduction is the best option to significantly reduce tobacco related deaths and diseases especially in those countries: "Given that over 80% of tobacco users are in low- and middle-income countries with meagre means to deal with tobacco-related consequences, the focus ought to be unwaveringly on maximum reduction of harm, by allowing people to exercise the choice of avoiding death and disease by switching to affordable and accessible risk-reduced alternatives if they are not willing or able to quit."
Clive Bates is now Director of Counterfactual, a consulting and advocacy practice focused on a pragmatic approach to sustainability and public health. He is very well known in the harm reduction environment as Former Director of Action on Smoking and Health (UK), (campaigning to reduce the harms caused by tobacco). According to Bates this pragmatic approach should be the rule for tobacco because it is the most efficient in spite of a restrictive context: "Good is more or less how we would like the world to be. That requires a few things. First, it requires a change of understanding in the public health community and the world of how harm reduction works. It is not about offering smoking cessation products. It is a reliable, valuable proposition of healthier alternatives…We need much more mindfulness of the perverse consequences of blundering in clumsy excessive regulation that does a disservice to the public good".
He then stressed the importance of communication: "We need a new narrative about THR in the public. The relentless negativity has to stop. People must start to see where the benefits are. We have to stop the tirade of false and misleading misrepresentations of science. Thirdly we need to shift to a risk proportionate regulatory regime. This means being very tough on the most harmful products, and being much more liberal and open minded about encouraging consumers to switch to the far less harmful products"
According to the WHO, smoking kills 8 million people each year and it is the leading cause of preventable death.
The demand for cassava is overtaking that of maize on both the local and regional market, the ministry of Agriculture has observed.
Agriculture minister Michael Katambo has said cassava is one cash crop whose market is booming due to its various industrial use.
He said in an interview that Government was supporting the production of cassava as it had a wide value chain and proved to contribute to the development of the country.
"Cassava market is now overtaking maize because it is now used in mineral processing, mealie meal blending, alcohol and ethanol production, and energy generation. With this corona virus, it is now also being used to make hand sanitisers," he said.
Every day, hundreds of millions of payment transactions are completed across the African continent. They're done using myriad technologies including cards, mobile money, and digital payments. By far the most, however, are in cash. Each of these competing payments is trying to dominate and defeat cash, with siloed "winner takes all" consumer payment offers, but which payment type can most effectively promote financial inclusion, helping grow economies and jobs along the way?
Given the success of mobile payments in Africa over the past decade or so, you might be surprised to learn that it isn't the technology most likely to be a game changer for meaningful financial inclusion for the informal productive economy. Instead, the best hope for financial inclusion and growth on the continent is a digital payments platform that is merchant centric, and that benefits the artisans, SMEs, and small farmers. A payment that empowers the productive economy.
Cash and mobile money
At present, cash is still king in many African countries. According to one report, cash accounts for over 50% of transaction value in South Africa. This is despite South Africa having one of the most mature banking and payment spaces and the deepest card penetration rates on the continent.
Despite the growth of digital payments, cash isn't going away. In fact, a report from The Currency Association shows that the value of cash in circulation grew steadily in six major African countries between 2008 and 2017.
That's understandable. Cash is easy to understand. Cash is trusted. You hand over a set amount and get the goods or services you desire. It's also so culturally entrenched that it doesn't require learning new behaviours or learning for merchants to "trust" that somehow your valuable goods are being exchanged for money in an account somewhere.
Despite its ubiquity and being the most deeply entrenched incumbent payment, there are serious downsides to cash.
Cash is costly and does not provide the digital transparency that financial institutions need to provide small merchants with helpful products and services. Cash that is taken into a business and then goes out again leaves no trace of it ever having been there, at least to the bank that is trying to serve the business. It is opaque by nature, which makes it difficult for the bank to understand a business. That opacity effect locks out small businesses and those operating in the informal sector from being included in the formal economy. Although counted as "included" for having a transaction account, cash-based businesses present too much cost and risk to be banked with higher value financial services and credit.
Mobile money throws up similar issues and introduces consumer fees which are also a significant inhibitor to financial inclusion, particularly if the P2P payment is on a 3rd party platform. One of the biggest drawbacks is the peer to peer (P2P) nature of mobile money payments (like cash, it goes in and out of a business without a record of the transaction). A merchant can spend or deposit cash and P2P payments anywhere. This is convenient but the flow of payments cannot be seen or predicted and therefore cannot be collateralized. This leaves the business as unbackable beyond a low value, fee-based transaction service.
The power of digital payments
Digital payments provide a track record in data that forms the basis of a formal banking relationship. It's for that reason that digital merchant-centric pull payments, where a customer presents credentials to a merchant and authorizes the merchant to "pull" the payment from the consumer's account, should be the norm.
This ability is provided to a merchant by an "acquiring bank", which assures that the payment will be received by the business' account at that bank. Because the payment cannot be redirected, it is a reliable indication of the business' cash flow. These payments can be collateralized and be used to guarantee a loan, to collect premiums, to set aside savings for pensions and investment, or for payroll services. This should be the focus when it comes to financial inclusion for the productive and informal economy in Africa: using a digital payment as a gateway to higher value financial services.
For merchants, there must be a much bigger benefit to accepting a digital payment at a fee than simply being able to move away from cash. That exponentially larger benefit comes in the shape of a formal relationship with an acquiring bank and the financial services that come with becoming a bankable business. There are many incidental benefits of any good digital payment platform, including contactless payments, instant clearing, and bill payment. Bit consumer convenience is not enough. Both the consumer and the merchant need to want the digital payment.
Merchant-centric payments deliver consumer and merchant benefits such as loyalty schemes, but only this type of payment can provide the digital transparency and reliability necessary to deepen a business relationship with an acquiring bank where the real value can be realized.
Much has been said about Africa's potential, but if that potential is to be unlocked, then small, medium, and micro enterprises (SMMES) need to be empowered with access to the same kind of formal financial services that large businesses have access to. Digital mobile merchant payments are a gateway to meaningful financial inclusion for the informal sector. Whoever manages to provide this stand to make a real contribution.
Malawian President Lazarus Chakwera has signed a Memorandum of Understanding on Economic Cooperation with South African President Cyril Ramaphosa on the final day of his two-day working visit to the 'rainbow nation'.
Chakwera arrived in South Africa on Thursday through Waterkloof Military Airbase in Pretoria and held bilateral talks with his South African counterpart before signing the agreement.
The Malawi leader said he is grateful to Ramaphosa for hosting him in Pretoria and called for South Africa's support as he starts his duties as SADC chair next year.
"During our bilateral talks, we agreed to enhance our cooperation in various fields of development including trade, health, migration and labour for the mutual benefits of our people.
"This has been cemented by the signing of memorandum of understanding on economic cooperation we have just witnessed. It is my hope that in future we will sign several MOU's that strengthen our cooperation through framework of the joint commission of this cooperation," said Chakwera.
On his part, Ramaphosa said: "We have just welcomed the signing of economic cooperation agreement and further agreed to work together to identify specific areas, which South Africa and Malawi through their companies continues to do business.
"We also endeavored to put more emphasis on people-to-people cooperation between our two countries given that we are one people and our people have been travelling between our two countries for generations."
The South African leader said the cooperation need to be advanced in areas such as culture, sports and recreation in an effort to bring the people of the two countries closer.
"We reviewed the state of peace and security in Africa, specifically Southern Africa and noted the need to collaborate efforts at addressing issues of peace and security in our region," he added.
Chakwera who flew on a chartered Malawian Airlines plane returns home.
His delegation included Cabinet ministers Eisenhower Mkaka (Foreign Affairs), Patricia Kaliati (Gender, Community Development and Social Welfare), Richard Chimwendo Banda (Homeland Security), Khumbize Chiponda (Health), Sosten Gwengwe (Trade) and Ken Kandodo (Labour).
Some of the ministers visited about 100 Malawians in detention at Lindera Repatriation Centre.
The trip to South Africa is the fifth for Chakwera since becoming Malawi's sixth President following his triumph in the court-ordered Fresh Presidential Election on June 23, 2020. To date, he has visited Zambia, Mozambique, Tanzania and Zimbabwe.
FAO lowers forecast for world cereal production, but this year’s output still expected to reach an all-time high
Global food prices continued rising for the fifth consecutive month in October, led by cereals, sugar, dairy and vegetable oils, according to a new report from the Food and Agriculture Organization of the United Nations.
The FAO Food Price Index, which tracks international prices of the most traded food commodities, averaged 100.9 points in October 2020, up 3.1 percent from September and 6.0 percent above its value in October 2019.
The FAO Cereal Price Index climbed 7.2 percent from the previous month and 16.5 percent above its value in October 2019. The surge was mainly driven by wheat prices amid shrinking export availabilities, poor growing conditions in Argentina and continued dry weather affecting winter wheat sowings in Europe, North America and the Black Sea region. Maize, feed barley and sorghum prices also remained under upward pressure in October, while those of rice subsided.
Source: FAO
UNCTAD has assessed the state of play in the two countries and identified policy actions required to harness e-commerce for development.
Tanzania is well-positioned to integrate into the global digital economy, thanks to its growing economy and a rapidly developing innovation ecosystem, a new UNCTAD assessment says.
The assessment of the country’s readiness to engage in e-commerce has revealed its potential to become a leading contender in online trade in east Africa, especially on mobile finance and digital payment fronts.
However, the lack of a national e-commerce strategy is holding Tanzania back, the assessment observes.
Also, the country has neither mainstreamed e-commerce into its national and sectoral development plans nor into inter-ministerial or public-private sector dialogue, further throttling progress.
“The coronavirus crisis has brought to the fore the value of e-commerce and digital solutions in enabling economic activities and broadening options for consumers in times of lockdowns,” said Shamika N. Sirimanne, director of UNCTAD’s division on technology and logistics.
“E-commerce can help maintain trade flows, an important part of tackling the fallout from the crisis, especially in least developed countries.”
Following the assessment, UNCTAD recommends several policy actions to grow Tanzania’s e-commerce sector.
They include crafting a national e-commerce strategy, enhancing information, communications and technology (ICT) infrastructure, creating a conducive legislative climate and providing incentives to startups.
Promising signals
The assessment acknowledges Tanzania’s promising signals in key areas. It has rolled out a series of e-government services, soon to be extended to its semi-autonomous region of Zanzibar.
The country’s economic growth has averaged 6% to 7% annually over the last decade. Increasing public and foreign investments also bode well for its future.
UNCTAD’s assessment found growing awareness of the benefits of new technologies among the country’s public sector, another positive sign.
Tanzania is well-connected in terms of hard infrastructure, but the cost of smartphones remains high, contributing to the low internet use – around 30% – among its population.
Challenges to overcome
The assessment identifies a slew of challenges the country needs to overcome to optimize its e-commerce potential.
Tanzania lacks specific e-commerce legislation and its legal framework is inadequate to create a conducive e-commerce business environment, limiting trust among users of digital technologies.
The growth of e-commerce is also hampered by the population’s limited awareness, exacerbating the lack of trust, the assessment finds.
While efforts have been made to develop ICT human capital and innovation hubs are growing fast, skills in digital entrepreneurship and e-commerce remain narrow.
Access to financing is also limited, with micro, small and medium-sized enterprises (MSMEs) facing difficulties obtaining bank credit.
High interest rates stand in the way of e-commerce expansion, while angel investment and venture capital funds are few and far between.
The use of formal financial services remains limited, mainly due to high costs and a lack of knowledge among most Tanzanians.
Malawi: An untapped potential
In neighbouring Malawi, a similar UNCTAD assessment found that e-commerce has the potential to move the country closer to achieving its development goals, but the sector needs to be structured and organized.
“Clear policy directions and higher visibility of the digital economy should be prioritized in the national development agenda,” the assessment says.
Though a policy framework for ICT development has given rise to an embryonic digital ecosystem in the country, Malawi has no stand-alone policy and strategy on the digital economy and e-commerce development agenda.
The country also lacks a blueprint for formal dialogue with the private sector and civil society on e-commerce and digital economy issues.
Other challenges include Malawians’ lack of trust in online systems, low level of internet access, low technology adaptation by firms, lack of access to financing and weak IT skills across the population.
Making progress, hurdles to beat
According to the assessment, Malawi has recently made improvements in the ICT infrastructure, with the extension of fiber-optic backbone and cross-border interconnections, the launch of 4G and the establishment of a universal service fund.
However, less than 14% of Malawians use the internet due to the high cost of access. The quality of internet service and last mile connectivity are also low, discouraging investment in e-commerce in the southern African nation.
To accelerate progress, Malawi must beat other hurdles such as red tape, costly and time-consuming procedures that slow e-commerce uptake, the assessment says.
More than 80% of surveyed private sector actors cited an unsupportive regulatory environment as a barrier to e-commerce solutions in the country.
Financial institutions in Malawi provide meagre and relatively costly credit to MSMEs, and the products and services they provide are not aligned to e-commerce business models, the assessment notes.
A few financial support schemes provided by donors, local and regional incubators/accelerators and partner financial institutions, however, bode well for the inclusion of potential e-commerce projects.
The Tanzania and Malawi assessments are among a series of 27 conducted by UNCTAD in least developed countries since 2017 with the support of Germany, Sweden, the Enhanced Integrated Framework (EIF) and the International Islamic Trade Finance Corporation.
"Now, more than ever, the world's poorest countries need support to bolster their economies. Based on the assessment’s recommendations, we look forward to working with the Malawian government, UNCTAD and other partners to help the country move towards a bright digital trade future," said Ratnakar Adhikari, the executive director of the EIF.
Source: UNCTAD