Are we now in a “new Cold War,” as headlines in recent months suggest? As the covid-19 pandemic rages on, relations between the United States and China have reached new lows, and President Trump threatened to “cut off the whole relationship.” This leaves economists and policymakers considering a question that once seemed unthinkable: What would happen to global supply chains if this decoupling should occur? Which countries can step into the vacuum created by this superpower conflict? Our recent study gives some answers. We show the building blocks are already emerging for a new international trade order — with a rapidly increasing number of poorer countries navigating this system. This has happened largely without the direction of global superpowers like the United States and China. Here is what you need to know. The ‘China shock’ has hit poor countries Like the United States, many poor countries have struggled with the economic and political effects of a “China shock” since the 1990s. As China’s export dominance in manufactured goods satisfied much of the demand from wealthier nations, developing countries saw a sharp decline in trade with the global north, as the figure below indicates. These countries have also been shut out of lucrative trade agreements with Europe and the United States, which concentrated primarily on deals with the larger “BRICS” (Brazil, Russia, India, China, South Africa). 5 ways the coronavirus is making the world’s most vulnerable a lot more vulnerable Our study explores what this shock has meant for poor countries...

Economies in sub-Saharan Africa (SSA) continued to improve business climates with best performance seen in the area of getting credit. Some 25 per cent of the reforms recorded by Doing Business 2020 were in the economies of SSA. Economies of the region enacted 73 reforms in the 12 months leading to May 1, 2020. Mauritius (13), ranked the highest in the region overall, followed by Rwanda (38) and Kenya (56). Compared with the previous year, SSA economies increased their average doing-business score by 0.9 points. Notably, most reforms in the region were in the areas of starting a business, dealing with construction permits and getting credit. Be that as it may, despite the advancements, there's still a long road ahead. Seventeen economies had no reforms in the 12 months through May 2019; three economies (Eritrea, Somalia, South Sudan) have never implemented any reforms in the past five years and two (Somali and South Sudan) have never implemented reforms in the areas. Regional score at 51.8 (out of 100) is way below OECD high-income average of 78.4 and the global average of 63. Only two SSA economies rank in the top 50 on the ease-of-doing-business rankings while most of the bottom 20 economies in the global rankings are from the region. Within the context of the much-hyped African Continental Free Trade Area (AfCFTA), one indicator — trading across borders — shows the region lagging. For instance, time to clear exporting goods at the border takes 97 hours compared to eight and...

Notwithstanding calls for the implementation of a continental trade deal, the latest Africa Regional Integration Index (ARII 2019) has shown that regional integration remains very poor and vital to building resilient economies that will survive the effect of the pandemic. According to the report, much more needs to be done to integrate regional economies to make them more resilient to shocks such as the current COVID-19 pandemic. Overall, the Index shows that levels of integration on the continent are relatively low with an average score of 0.327 out of 1. The second Africa Regional Integration Index (ARII 2019) was unveiled recently by the Economic Commission for Africa (ECA), the African Development Bank and the African Union Commission (AUC), with a call to action to African economies to deepen their integration. The 2019 Index, which builds on the first edition published in 2016, provides up-to-date data on the status and progress of regional integration in Africa. It also helps to assess the level of integration for every Regional Economic Community (REC) and their member countries. The report observed that although 20 countries score above average, no African country can be considered well integrated into its region. Even the most integrated country, South Africa, scores 0.625 less than two-thirds of its potential on the scale. For Nigeria and other African countries to succeed in its long-standing efforts towards closer economic integration, ARII 2019 recommended that countries improve regional networks of production and trade by enhancing countries’ productive, distributive, and marketing capacities; build...

Poultry farmers in Kenya want the Ministry of Trade to intervene on the discriminative tariff by the Uganda on chicken meat. Uganda Revenue Authority has in the past two years charged Kenyan chicken meat exports a cumulative 25 per cent in taxes – 18 per cent VAT, one per cent Railway Development Levy and six per cent Withholding Tax. “We want the government to review the taxes charged by our neighbors, both Uganda and Tanzania,'' Kenya Poultry Farmers president Monica Wanjiru said. She added that their plea is to the government to impose tax Uganda poultry imports or for the Ugandan government to waive 19 per cent tax on VAT and Railway Development Levy. The taxes charged by the Uganda, Wanjiru argued, violates World Trade Organization first principle on fair trade. This means that the Uganda poultry products have free access to the Kenyan market while the Kenyan products are hindered from access to Uganda through Non-Tariff Barriers (NTBs) or imposition of domestic taxes (VAT, withholding taxes or railway levies). Wanjiru added that “Tanzania has also imposed stringent requirements for compliance from the Tanzania Bureau of Standards (TBS) which many players in the poultry sector have seen as deliberate efforts to bar them from accessing the market." In 2016,Tanzania banned the importation of poultry and poultry products into the country. “We, therefore, cannot overemphasize the vulnerability of the Kenyan poultry industry from the regional attack,"Wanjiru said. According to the lobby, the most recent impact of such actions by Tanzania culminated...

Over the last few weeks, rumors—and then a few stories—have emerged that the long-expected implementation of the Africa Continental Free Trade Area (AfCFTA) agreement due on July 1 would be delayed for up to a year while the continent deals with an unprecedented economic crisis in the wake of the Covid-19 pandemic. While the African Union hasn’t formally confirmed any intention to pause their plans, it hasn’t seemed totally unrealistic this would be under consideration during such unprecedented times. AfCFTA, which was ratified by enough African countries last year, created the world’s largest free trade zone with a combined GDP of $3.3 trillion. Dropping trade barriers between African countries would boost trade on the continent by over 50%, according to some estimates. Others believe it would double intra-continental trade in Africa. But even with all the practical concerns around a pandemic which is not believed to have peaked yet on the continent, many long time supporters do not believe now is the time to delay the AfCFTA’s implementation—they argue the opposite. “The Continental Free Trade Agreement can be one of the most important tools of our economic recovery,” says Paulo Gomes, a former World Bank executive director and chair of the executive committee of AfroChampions, an African Union-mandated network to coordinate private sector discussions around AfCFTA. “If I’m an African finance minister I don’t have quantitative easing and the money printing money tools of the wealthier economies—trade can be our stimulus.” For Gomes and others this isn’t simply about intra-African...

Tanzania Daily News (Dar es Salaam) AS coronavirus pandemic effects are being felt across the East African Community (EAC), the community feels the need to embrace the principle of comparative advan- tage so as to keep business going and bring life back to normalcy. The idea has been floated just a few days after Presi- dent John Magufuli and his Kenyan counterpart, Mr Uhuru Kenyatta conversed and solved a border dispute about truck drivers crossing from one country to another. Tanzania has, from the beginning opted for no lockdown practice and the move has since paid off. Speaking on behalf of EAC Secretary General, Ambassador Liberat Mfumukeko, Kenya's EAC Affairs and Regional Development Cabinet Secretary (CS), Mr Adan Mohammed said that the aim of embracing the principle was to keep regional trade going and that EAC remains united and together defeat the Covid-19 for common good. "We must therefore strengthen our trade bond and utilise the principle of comparative advantage to keep regional trade going," said the CS upon handing over mobile labs from the EAC Secretariat to Kenya. "EAC must remain to- gether to defeat this disease for our common good," added Mr Mohammed. The principle refers to an economy's ability to produce goods and services at a lower opportunity cost than that of trade partners. A comparative advantage gives a company the ability to sell goods and services at a lower price than its competi- tors and realise stronger sales margins. The law of comparative advantage is popularly attributed to...

In the last few months since reporting the first COVID-19 positive case, African countries have borrowed at least $10 billion in new loans to deal with the adverse impact of the pandemic on livelihoods and economies. These add to mounting debts at a time when tax revenue is shrinking, export earnings are in free fall, and diaspora remittances are drying up. Meant to finance the region’s response to and protect its economies against ensuing disruptions from the virus outbreak, most of those loans have come mainly from the International Monetary Fund, with Africa dominating the lender’s COVID-19 emergency financing list. The Fund late April approved $1.23 billion of emergency funding for Kenya and Uganda, saying the pandemic will likely exact a severe toll on the two East African economies. The $739 million Rapid Credit Facility is meant to boost Kenya’s international reserves to help cover the balance of payments shortfalls this year while also providing resources to improve public health and support for households and companies hit hard by the crisis, the IMF said at the time. In addition to the IMF loan, Kenya has also turned to the World Bank ($6.6 million and $1 billion for budget support), the United States government, as well as raised about $20 million from private sector firms and individuals to finance its COVID-19 response. Among the six East African Community member states, Kenya has borrowed the most with an estimated $2.5 billion secured since March. Uganda meanwhile has added $540.2 million to its...

Kenya Transporters Association (KTA) Chief Executive Officer Dennis Ombok has vowed to continue with the border protests against the alleged high handedness on the Ugandan side of the border. Addressing a press conference in Mombasa Ombok said truckers who were on the Ugandan side of the border were recently teargased by Ugandan security forces on grounds that they were disobeying social distancing directives and other health protocols. He said many of the drivers who took the covid-19 tests several days ago are not aware of the outcome of those tests to date despite continued promises that the results would be known within 48 hours. Ombok said truck drivers were now being discriminated and stigmatized along the northern transport corridor with claims that they become the real threat to efforts to combat the covid-19 pandemic. The KTA official said it appears authorities with the connivance of the coronavirus pandemic were trying to sabotage cross border trade and drive transporters out of business. “We want the government to send a high level delegation just as they did with Tanzania to resolve our covid-19 problems with Ugandans” he said. The transporters are also asking the harmonization of covid-19 screening in the East African region saying they were being subjected to multiple tests. Ombok also protested the decision by the Transport Ministry that all cargo destined for Uganda, Rwanda and South Sudan will be transported via the Standard Gauge Railway (SGR) for clearance at the Naivasha inland container depot beginning June 1. He said...

All transit cargo destined for Uganda, Rwanda and South Sudan will be transported either on Standard Gauge Railway (SGR) for clearance at the Inland Container Depot (ICD) at Naivasha or Metre Gauge Railway to Tororo/Kampala from 1st June 2020. In a statement Friday, Cabinet Secretary for Transport, Infrastructure, Housing and Urban Development James Macharia says all transit cargo railed to ICD Naivasha will then be collected by trucks to the partner states via Busia or Malaba. He further, said the fuel products will be transported by pipeline to Kisumu and thereafter by lake Victoria to Port Bell or Jinja. he CS also directed that all the transit cargo/containers transported on SGR will be armed only at ICD at Naivasha to be tracked through the Regional Electronic Cargo Tracking System; and all exports (both full and empty exports) not railed on metre gauge railway will be delivered to ICD for railage to the Port of Mombasa. “The Heads of State, Their Excellencies President Paul Kagame of the Republic of Rwanda; President Uhuru Kenyatta of the Republic of Kenya; President Yoweri Kaguta Museveni of the Republic of Uganda and President Salvar Maryardit Kiir of the Republic of South Sudan during their Consultative Meeting of the East African Community held by Video Conference on 12th May 2020 considered the current status of the outbreak of the Covid-19 Pandemic in the region and directed the Ministers responsible for Health, Transport, and EAC Affairs to adopt a Digital Surveillance and Tracking System for drivers and...

[vc_row][vc_column][vc_column_text] According to the United Nations Conference on Trade and Development, global trade is predicted to fall by a record 27 per cent in the second quarter of 2020. In this episode of Doing Business in Rwanda, we take a look at the impact COVID-19 has had on trade and the establishment of cross border cargo transit logistics platform to curb the spread of the virus and facilitate smooth trade between neighbouring countries…. Watch video here: Source: CNBC Africa[/vc_column_text][/vc_column][/vc_row]