Current Trade News

CASSAVA production offers immense untapped opportunities for extending labour use in the country and exploits price peaks in food market that would ultimately lead to increased earnings for smallholder farmers.
Tanzania is among the three African countries that produce about 70 per cent of Africa's cassava output alongside Nigeria and the Democratic Republic of Congo.
Cassava has huge potential to boost farm incomes, reduce rural and urban poverty and help close the food gap.
Globally, cassava is the fourth most important staple crop after rice, wheat and maize, and plays an essential role in food security.
Currently, about half of the world production of cassava is in Africa. Cassava is cultivated in around 40 African countries, stretching through a wide belt from Madagascar in the Southeast to Senegal and to Cape Verde in the Northwest.
Cassava processing for value addition is not only an important strategy for addressing post-harvest losses but the potential to create additional employment opportunities along the supply chain.
This is because cassava starch is an important source of biomaterial for different food and non-food industrial applications.
It is from this backdrop that Roijok Progress Centre has for years being involved closely in promoting farmers' efforts in cassava production with the end goal of boosting their earnings as important tool in the fight against poverty.
The Managing Director of the Roijok Progress Centre, Ms Rose Urio said they have worked with smallholder farmers through contract farming while assuring them reliable markets for their products.
"The initiative that goes through the whole cassava value chain has transformed smallholder cassava farmers through increased productivity while boosting their earnings for improved living standards," she said.
She said among the many successes that the organisation posted in working with smallholder farmers includes the empowerment of women and youth take active part in cassava production.
Cassava is one among the foods produced in more than 17 regions in Tanzania, more than 60 industries in the country source their raw materials from cassava and as much as health is involved cassava has much protein and the best lithium is found in cassava flour.
Due to cassava's growth characteristics and ability to grow in poor soils and regions prone to drought, it is preferred by resource poor farmers in many tropical countries.
While cassava plays an important role as a food security crop for subsistence farmers, it is prone to rapid postharvest deterioration.
Moreover, farmers producing cassava can increase their income by finding alternative end uses to home consumption.
To meet the high demand for cassava in Tanzania, cultivar selection, production and processing all need to be improved.
Enabling policies that create satisfactory business opportunities for small holder farmers, traders and processors for starch industries is also critical.
Ms Urio thanked the government for the encouragement in the effort to promote cassava production and particularly when the parliament in 2017 declaring the crop as one with immense business opportunities that would lift farmers from poverty.
She said Roijok Progress Centre has been engaging in cassava production for eight years with their main goal being that of commercialising cassava to boost farm-ers' earnings and contribution to economic growth.
Throughout this period, the organisation has been involved in various campaigns to create awareness particularly on best cassava farming practices and how farmers can explore other potentials along its value chain.
For example, one of the successful campaigns was Cassava for life which was held in Tanga Region in collaboration with the Ministry of Agriculture through which they managed to secure new markets within and outside the country.
Furthermore, the Managing Director pointed out the fact that of all the other products, cassava product has almost more usage and benefits in the world than other food products.
Apart from being food for human being and animals, cassava has other important use namely for making clothes, papers, mixing colours as binders, all batteries use lithium and the best lithium is found in cassava.
She noted that her company has opened up a large door which helps different people to fight against poverty where they have been sending people out of the county like USA to learn more about agriculture and many youth are happy for getting this opportunity as well as empowerment programme.
Ms Urio, as the founder of the Roijok Progress Centre has played a greater role in encouraging youth and women to work hard and become successful.
All these efforts were recently recognised after emerging an award winner of MALIKIA WA NGUVU in 2016 and in 2019 as winner on Women Empowerment.
She is also a motivator and a mentor to many youth and women in different matters. As an integral component most Cassava in Tanzania are an integral component of most cropping systems and among the more important staples in many zones.
It plays an important role as a food security crop and provides useful opportunities for extending labour use and exploiting price peaks in the food market.
Malawi is among the top five countries in Africa to benefit from the Common Market for Eastern and Southern Africa (Comesa) digital financial inclusion plan.
The regional bloc, Comesa is implementing a digital financial inclusion plan aimed at promoting trade within the region and includes marginalised communities, which are excluded in terms of financial inclusion.
This was made known last week at a high-powered business case validation meeting held in Lusaka, Zambia.
Governor of the Reserve Bank of Malawi Dr. Dalitso Kabambe in his keynote speech said: "Interoperability is key to commercial banks and network operators for the uptake of digital financial services; it enhances Small and Medium enterprises (SMEs) trade through facilitation of seamless money transfer."
Comesa Business Council chief executive officer, Sandra Uwera expressed gratitude to the Malawi Government for supporting the Digital financial Inclusion initiatives, which will increase intra-trade within COMESA region by at least 10% annually.
Project Manager for Digital Financial Inclusion at COMESA Business Council, Dr. Jonathan Pinifolo said: "The North-South corridor is the most extensive corridor system in the region, linking the largest number of countries in eastern and southern Africa.
"The countries we are working with in this region include Malawi and Zambia, and out of the 21 countries, they have picked nine countries in Africa based on the trade activities taking place within the various trade corridors.
According to Pinifolo, the nine countries include; Mauritius, Egypt, Ethiopia, Zambia, Malawi, Kenya, Uganda, Rwanda and Tanzania in EAC.
Pinifolo further explained that Comesa has already developed a business case report and follow up interventions which include harmonising Finance and ICT policy frameworks within the region, capacity building of Micro, Small and Medium Enterprises (MSMEs)
"We have also developed the commissioning of a regional integrated digital common payment scheme incorporating commercial banks, Mobile Network Operators, Fintechs and other institutions providing financial services," said Pinifolo.
Speaking during the opening ceremony, Assistant Secretary General for Programmes at COMESA, Ambassador Dr. Kipyego Cheluget said that COMESA as a strong advocate for enterprise growth and development of our local and regional markets, the meeting was held in a timely period when they are focusing on the growth of Small and Medium enterprises.
"Africa's economic transformation lies in the ability to increase value addition and strengthen the participation of our SMEs in national and regional supply chains", said Cheluget.
Among other institutions, the business case validation was attended by Reserve Bank of Malawi, MACRA, Ministry of Finance and Economic Planning, Ministry of ICT, Ministry of Trade and Industry, Malawi Confederation of Chamber of Commerce and Industry (MCCI), Commercial banks (National Bank of Malawi and Standard Bank), Telecommunication Operators (Airtel and MTL), NITEL, SPARC Systems, ICT Association of Malawi (ICTAM), NABW, Bayer, National Association of Small and Medium Enterprises (NASME), Legis Policy Associates from Kenya and Kiani Holdings from South Africa.
The Common Market for Eastern and Southern Africa is a free trade area with twenty-one member states stretching from Tunisia to Eswatini.
Comesa was established when a treaty was signed on November 5, 1993, in Kampala, Uganda, and then ratified the following year in Lilongwe, Malawi, on December 8, 1994. It replaced the former Preferential Trade Area (PTA) that existed in 1981.
President Paul Kagame encouraged American investors to participate in economic opportunities as Africa emerges out of the Covid-19 recovery process for mutual benefit.
The President made the call while opening the four-day Corporate Council on Africa (CCA) Leaders Forum.
CCA, which was established in 1993, promotes business and investment between the United States and African countries.
Opening the forum, the President said that there are mutually beneficial opportunities emerging as the continent seeks to recover and get past the pandemic.
Last week, the African Union launched a medical supply platform pooling the procurement of essential health items implemented in partnership with the African private sector.
The initiative is spearheaded by business magnate Strive Masiyiwa at the AU's invitation.
Kagame noted that there is room for American private sector participation in the initiative.
Another aspect that has room for collaboration he said is ensuring adequate fiscal space for Africa which is essential for a sustainable public health response as well as to preserve jobs and livelihoods.
An additional opportunity on the continent is to work together in trade especially with the upcoming launch of the African Continental Free Trade Area.
"The US has been a strong supporter of development through trade such as with AGOA, as these internal trade obstacles continue to fall, we look forward to strong engagement from American companies and investors working together with African firms," Kagame said.
Kagame said that in response to the pandemic and its effects, closer and stronger cooperation between countries and partners will allow for better and stronger response as countries strive to deal with public health challenges, trade and business.
"Free trade benefits more from the understanding that we cannot avoid working together if we want to thrive," he added.
Highlighting Rwanda's recovery outlook, the Head of State said that the local economy prior to the pandemic was strong, stable and with growth in the medium and long term assured.
This, he said, gives the government confidence in investing in the recovery of the economy.
He also noted that the Covid-19 curbing measures such as lockdown, testing, tracing among others had proven to be effective as the country continues to see recoveries. The first case of Covid19 was reported in Rwanda about 100 days ago.
The summit was held under the theme: "Resilient U.S.-Africa business engagement to drive post-Covid-19 recovery".
The five individual member states of the East African Community will lose more than $5 billion (roughly Rwf4.7 trillion) from agricultural exports, this year due to the coronavirus pandemic, according to McKinsey & Company's latest report released in June.
"Africa's exports of food and agricultural products are worth an estimated $35 billion to $40 billion a year, and some $8 billion a year flows through intra-regional trade in these products," the report reads in part.
However, as a result of the coronavirus crisis, there is already reduced food demand, disruption of trade in export crops even within regions, and severe crop production and processing shocks.
The supply disruptions could result in a severe economic blow for countries such as Kenya, Tanzania, and Uganda which rely on agricultural exports as primary or secondary source of export earnings.
Additionally, the report, Safeguarding Africa's Food Systems Through and Beyond the Crisis revealed that "Africa's food and agricultural imports amount to between $45 billion and $50 billion a year along with $6 billion a year in imports of agricultural inputs and if measures are not checked, we are likely to lose the foreign earning from agricultural products."
The report noted that the disruption follows various coronavirus containment measures including the suspension of flights and ultimate reduction of about 75 per cent in available cargo capacity and a twofold increase in cargo costs among others.
Statistically, around 80 per cent of agriculture exports from Africa are to four regions; Western Europe (around 45 per cent), South and East Asia (20 per cent), the Middle East (10 per cent), and North America (five per cent) and all the markets were inaccessible due to lockdowns and suspended flights.
On the other hand, the report warned of food price volatility and nutritional problems due to lack of adequate nutritional foods as a result of increased food insecurity due to affordability of agricultural inputs, and depreciating currencies.
In Rwanda, the Economic Recovery Plan Blueprint, noted that since the Covid-19 outbreak, the weekly volume of exports had dropped to 30-34 MT but was optimistic that it would pick up in coming days.
However, among the ongoing interventions is working with the national carrier, RwandAir to deliver goods to some markets in Europe which has allowed producers maintain delivery of fresh produce to a number of markets in Europe.
The report suggests that safeguarding food security through understanding and managing the forces that shape demand, and ensuring agricultural production is sustained. Adding that "It will also be important to maintain trade flows, and keeping borders open for trade as far as possible"
To resume normalcy of horticulture export, the volumes of weekly exports will have to rise from a current export capacity of 30-35 Metric tonnes to between 80-100 Metric tonnes as was the case prior to the Covid-19 pandemic.
NAEB is working with exporters to consolidate demand in markets served to ensure that there are volumes available to respond to demand.
This has ensured that producers and exports are in position to respond to demands collectivity as opposed to individual efforts which can be challenging for operations.
Other interventions including input support such as subsidization for products such as fertilizers to ensure that farmers can be able to maintain productivity to respond to demand in global markets. The support also includes training on best farming practices to improved productivity and compliance to global market standards.
The agency will also rollout marketing and promoting local produce globally for market linkage as well as work with producers to facilitate compliance and certification.
The intervention is also in the form of facilitation of Business to Business linkages to for exporters to interact with buyers in global markets improving chances of further cooperation and opening new markets.
World trade fell sharply in the first half of the year, as the COVID-19 pandemic upended the global economy. However, rapid government responses helped temper the contraction, and WTO economists now believe that while trade volumes will register a steep decline in 2020, they are unlikely to reach the worst-case scenario projected in April.
The volume of merchandise trade shrank by 3% year on year in the first quarter according to WTO statistics. Initial estimates for the second quarter, when the virus and associated lockdown measures affected a large share of the global population, indicate a year on year drop of around 18.5%. These declines are historically large, but could have been much worse.
The WTO's 20 April annual trade forecast, in light of the large degree of uncertainty around the pandemic’s severity and economic impact, set out two plausible paths: a relatively optimistic scenario in which the volume of world merchandise trade in 2020 would contract by 13%, and a pessimistic scenario in which trade would fall by 32%. As things currently stand, trade would only need to grow by 2.5% per quarter for the remainder of the year to meet the optimistic projection.
However, looking ahead to 2021, adverse developments, including a second wave of COVID 19 outbreaks, weaker than expected economic growth, or widespread recourse to trade restrictions, could see trade expansion fall short of earlier projections.
"The fall in trade we are now seeing is historically large – in fact, it would be the steepest on record. But there is an important silver lining here: it could have been much worse,” said Director General Roberto Azevêdo. "This is genuinely positive news but we cannot afford to be complacent. Policy decisions have been critical in softening the ongoing blow to output and trade, and they will continue to play an important role in determining the pace of economic recovery. For output and trade to rebound strongly in 2021, fiscal, monetary, and trade policies will all need to keep pulling in the same direction."
In light of available trade data for the second quarter, the April forecast’s pessimistic scenario, which assumed even greater health and economic costs than what had transpired, appears less likely, since it implied sharper declines in the first and second quarters.
The COVID 19 pandemic and associated containment efforts intensified in the second half of March. Strict social distancing measures and restrictions on travel and transport were fully in effect in most countries throughout April and May, and are now increasingly being relaxed. These developments are reflected in a variety of economic indicators which, taken together, suggest trade may have possibly bottomed out in the second quarter of 2020. Global commercial flights, which carry a substantial amount of international air cargo, were down nearly three quarters ( 74%) between 5 January and 18 April, and have since risen 58% through mid-June. Container port also appears to have staged a partial recovery in June compared to May.
Meanwhile, Indices of new export orders from purchasing managers' indices also started to recover in May after record drops in April. It is useful to keep in mind that these rebounds follow historic or near-historic declines, and will need to be monitored carefully before drawing any definitive conclusions about the recovery.
Looking ahead to next year, a slower-than-expected pace of economic recovery would weigh on trade growth. On the other hand, a quick return to its pre-pandemic trajectory would imply trade growth in 2021 of around 20%, in line with the April forecast’s optimistic scenario. Monetary, fiscal and trade policy choices will play a significant role in determining the pace of recovery.
The outlook for the global economy over the next two years remains highly uncertain. This is reflected in the range of GDP estimates from other international organizations, in some cases relying on multiple scenarios. The World Bank, OECD and IMF have all released forecasts showing significant slowdowns in global trade and GDP; all are broadly consistent with the WTO's forecast for the current year. The World Bank's recent forecast would see global output decline by 5.2% in 2020, falling between the WTO's optimistic and pessimistic range. Other international organizations' GDP forecasts for 2020 are also increasingly negative, even as their trade projections stay roughly in line with the WTO's optimistic scenario. These estimates imply a less negative trade response to declining GDP growth than was observed during the global financial crisis of 2008 09.
The responsiveness of trade to changes in income can be measured by the ratio of the growth of merchandise trade volumes to real GDP growth at market exchange rates, also referred to as the income elasticity of trade. The implied elasticity under the WTO's optimistic forecast for 2020 was 5.3 – in line with that seen during the financial crisis. However, if world GDP instead contracts by the World Bank's estimated 5.2% with a trade decline of 13.4%, the elasticity would only be 2.6. Lower elasticity implies trade holds up better for a given fall in income.
There are several reasons why trade might respond less to changes in GDP than it did during the financial crisis. First, fiscal and monetary policies have arguably been rolled out more quickly and on a larger scale in the current crisis than they were in 2008 09. The WTO forecast scenarios did not include an attempt to model either set of policy responses, since, at the time, these policies were just being introduced. Second, income support to households and expectations that the pandemic would eventually ease may have encouraged consumers to maintain consumption levels at a higher level than expected. Finally, much of the decline in output has been concentrated in non tradeable services such as hospitality, personal services and entertainment, which tend to be less import intensive than manufacturing.
Although purchases of consumer durables such as automobiles fell sharply earlier in the crisis other economic sectors have shown signs of resilience in recent weeks. Sales of consumer electronics have thus far held up better than might have been expected, supporting international trade in these products. For example, according to China's customs statistics, the country's exports of automatic data processing machines, including computers, were up 30% year-on-year in US dollar terms in April. Anecdotal evidence similarly points to strong demand for computer and information technology services, which have facilitated working from home during the crisis.
Automobile sales have also rebounded from recent, though admittedly extreme, lows. For example, sales of cars in China were up 5% year on year in May after falling 79% in February. Car sales in Western Europe and the United States were still down sharply in May compared to last year, but declines were smaller than in the previous month. Increased purchases of consumer durables could be seen as a bellwether signaling renewed consumer confidence as lockdowns are lifted and economies start to revive. They will thus be closely monitored in the coming months.
Source: WTO

POST Covid-19 life has begun with smooth trade across Tanzania-Kenya borders after the East African Community (EAC) partner State leaders- Dr John Magufuli and Uhuru Kenyatta initiated a diplomatic gesture.

In sight, the regional apex body of private sector associations and corporate - East African Business Council (EABC) has confirmed that the initiatives by the two leaders were paying with witnessed resumption of smooth trade between the two countries.

Commenting on the flourishing business, EABC Chief Executive Officer (CEO), Dr Peter Mathuki, said yesterday that agreements struck at a bilateral meeting of ministers from both sides at Namanga, following the presidential talks are commendable for they have reduced the clearance of cargo at the frontiers.

"The sustainable way to combat the Covid-19 as a region was to deploy an EAC coordinated approach and also economic recovery strategy. If partner states of the EAC work in isolation on Covid-19, it will be costly and take us longer to flatten the curve," pointed out Dr Mathuki, who is also a former East Africa Legislative Assembly (EALA) member.

At the meeting, the leaders resolved that truck crews first be tested using World Health Organization (WHO) standards in their countries of origin and issued with a 14-day Covid-19 free certificate that one would show during one's journey into another state.

Dr Mathuki also lauded the EAC partners for the increased intra-trade in the bloc, where member states have taken to sourcing final products and raw materials in wake of the disease that was disrupting global business supply chain.

"The EABC appreciates President John Magufuli of Tanzania and President Uhuru Kenyatta of Kenya for reiterating their commitment to the EAC regional integration agenda," said the CEO.

It was President Uhuru, who phoned his Tanzanian counterpart for amicable talk as trade tiff between the two neighbors escalated over Covid-19 testing at the borders.

In the course, the leaders agreed and directed their officials to meet at Namanga on May 22, where they resolved to facilitate a seamless cross-border movement of goods and people to end the stand-off that had led to sanctions imposed on both sides' merchandises.

However, the ministers agreed that each country should create conducive places where the truck drivers could stop for a rest and that such places be equipped with necessary amenities.

They also agreed that the two countries undertake random Covid-19 screening at the designated resting places, said the communique, adding that the testing be done in a transparent manner.

The parties equally resolved that in case of a truck crew tested positive of the disease, the owner of the truck would be allowed to replace the team that would also be screened and their journey allowed to proceed.

At the same time, they reached a consensus to release to the public data on the status of Covid-19 without mentioning the nationality of the infected person.

Tanzania was represented by Minister for Works, Transport and Communication, Engineer Isack Kamwelwe, while Kenya was represented by Cabinet Secretary in the Ministry of Transport, Infrastructure, Housing, Urban Development and Public Works, Mr James Macharia.

Dr Mathuki said that the Namanga one-stop border post remains a strategic entry point for East and Central Africa and termed the diplomatic intervention a positive gesture.

Through its 'EAC Administrative Guidelines to Facilitate Movement of Goods and Services During the Covid-19 Pandemic', the EAC Secretariat urged EAC partner states to treat truck drivers and crew, who test positive for Covid-19 in the host partner state, rather than deport them to the country of origin as that would result in further spread of the disease.

The Secretariat called on partner states to enforce mandatory screening or testing of truck drivers and their crew at border posts, and as well undertake mobile monitoring during transit at selected inland points.