<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1110" height="740" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-1110x740.jpg" alt="" class="wp-image-395422" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-1110x740.jpg 1110w, https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-scaled.jpg 2048w" sizes="auto, (max-width: 1110px) 100vw, 1110px" /><figcaption>oMalayitsha (transporters) Charles and his colleagues buy groceries for family which will be transported across the border to Zimbabwe on February 20, 2019. &#8211; Items are loaded in Johannesburg onto trailers attached to minibuses which make the 550 kilometres (340 miles) journey north to the border of Zimbabwe, where economic situation has dramatically deteriorated, pushing inflation above 50 percent, and shortages of household essentials have become widespread. (Photo by GULSHAN KHAN / AFP) (Photo credit should read GULSHAN KHAN/AFP via Getty Images)</figcaption></figure>



<a href="https://www.imf.org/en/Publications/REO/SSA/Issues/2022/10/14/regional-economic-outlook-for-sub-saharan-africa-october-2022?utm_medium=email&amp;utm_source=govdelivery">Sub-Saharan Africa</a>&nbsp;faces one of the most challenging economic environments in years, marked by a slow recovery from the pandemic, rising food and energy prices, and high levels of public debt. One of the most urgent issues confronting the region is the need to tackle decade-high levels of&nbsp;<a href="https://www.imf.org/-/media/Files/Publications/REO/AFR/2022/October/English/RisingInflationNote.ashx?utm_medium=email&amp;utm_source=govdelivery">inflation</a>—which are devastating incomes and food security—while also supporting growth.



While there are big differences between countries, the median of inflation rates in the region increased to almost 9 percent in August. And even though the rise has been less dramatic than in other parts of the world, and the drivers are different, inflation is nearly double pre-pandemic levels, risking social and political instability and worsening food insecurity.<a></a>



Despite a rebound last year, the fallout from the pandemic has kept domestic economic activity in sub-Saharan Africa relatively muted, and we expect growth in the region to slow this year. Most countries in the region have lacked the resources to support and stimulate growth, in sharp contrast to richer countries elsewhere that could inject trillions of dollars into their economies.



In sub-Saharan Africa, inflation has been driven less by domestic activity than in advanced economies. Instead, external developments have shaped the path of inflation since the start of the pandemic. They include the sharp spike in global commodity prices, swings in the exchange rate, global supply chain disruptions, and natural disasters.



In the&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2022/09/30/global-food-crisis-demands-support-for-people-open-trade-bigger-local-harvests?utm_medium=email&amp;utm_source=govdelivery">case of food</a>, the&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2022/09/26/africa-food-prices-are-soaring-amid-high-import-reliance?utm_medium=email&amp;utm_source=govdelivery">prices of key staples</a>&nbsp;such as maize and wheat have increased since 2019, contributing two-thirds of overall inflation in fragile states and one-half elsewhere in the region. Higher global energy prices and the&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2022/10/14/how-countries-should-respond-to-the-strong-dollar?utm_medium=email&amp;utm_source=govdelivery">strong dollar</a>&nbsp;have also fed through to inflation indirectly, via transportation and tradable goods like household products.



By contrast, there have been only modest increases for the prices of goods and services that most reflect domestic demand pressures, so-called nontradables—which typically include any locally-produced services, such as in the hospitality, health, or education sectors.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="538" height="538" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-1-4_crop.jpg" alt="" class="wp-image-420660" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-1-4_crop.jpg 538w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-1-4_crop-300x300.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-1-4_crop-90x90.jpg 90w" sizes="auto, (max-width: 538px) 100vw, 538px" /></figure>



With food and energy accounting for half of household consumption in sub-Saharan Africa, living costs across the region have spiraled. The IMF estimates that 12 percent of the region’s population will face acute&nbsp;<a href="https://www.imf.org/-/media/Files/Publications/REO/AFR/2022/October/English/FoodSecurityNote.ashx?utm_medium=email&amp;utm_source=govdelivery">food insecurity</a>&nbsp;by the end of this year.



Many countries have therefore turned to subsidies and tax cuts to alleviate the squeeze in household incomes. These measures should be temporary and as well targeted as possible to maximize their impact and minimize their costs on already-stretched budgets.



Central banks across the region had already started raising interest rates in response to rising inflation, capital outflows and currency depreciation resulting from monetary policy tightening in advanced economies. Examples include Ghana, Malawi, Mozambique, Nigeria, Uganda and the economic and monetary unions for both Central and West Africa.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="538" height="718" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-2-3x4-19_crop.jpg" alt="" class="wp-image-420661" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-2-3x4-19_crop.jpg 538w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-2-3x4-19_crop-225x300.jpg 225w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-2-3x4-19_crop-67x90.jpg 67w" sizes="auto, (max-width: 538px) 100vw, 538px" /></figure>



Monetary authorities also find themselves facing an increasingly delicate trade-off: raising rates to keep inflation in check will risk choking off credit for investment, depressing economic activity, and reducing incomes. Meanwhile, fiscal consolidation and the global slowdown weigh on domestic economic activity.



That means central banks should proceed with caution and raise interest rates gradually so as not to jeopardize the recovery. But policymakers must also not be complacent: countries where domestic demand pressures are acute, or inflation is very high may need to tighten faster or more decisively.



The same applies to countries where monetary policy credibility is weak, the currency is depreciating rapidly, or foreign exchange reserves are shrinking. While countries with exchange rates that are fixed or heavily managed have, so far, experienced lower inflation than those with more flexible regimes, their ability to control the pace of interest-rate increases is constrained by their currency arrangement.



There are some concerns that monetary policy could still be too accommodative, given that rate increases have not kept pace with inflation. Policy coordination can help. Fiscal consolidation has a role to play in countries where policy is too loose, as can a combination of rate increases and currency depreciation.



Given sub-Saharan Africa’s fragile recovery, combined with the fact that domestic demand pressures have not so far been an important driver of inflation, policymakers must proceed with caution in coming months while closely monitoring inflation.



—&nbsp;This blog, which draws on the October 2022 Regional Economic Outlook for Sub-Saharan Africa, reflects additional research contributions from Seung Mo Choi, Samson M’boueke, and Cleary Haines.



<a href="https://www.imf.org/en/Blogs/Articles/2022/10/20/africas-inflation-among-regions-most-urgent-challents?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"></a>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="450" height="800" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-table-44-01-63-45-43_crop-450x800.png" alt="" class="wp-image-420662" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-table-44-01-63-45-43_crop-450x800.png 450w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-table-44-01-63-45-43_crop-169x300.png 169w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-table-44-01-63-45-43_crop-51x90.png 51w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-table-44-01-63-45-43_crop.png 538w" sizes="auto, (max-width: 450px) 100vw, 450px" /></figure>

SAFRICA-ZIMBABWE-ECONOMY-TRADE

Africa’s Inflation Among Region’s Most Urgent Challenges

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="581" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-820x581.jpg" alt="" class="wp-image-419263" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-820x581.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-300x213.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-127x90.jpg 127w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-768x544.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-1536x1088.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Karen Keylock, Nedbank, National Franchise Manager</figcaption></figure>



While Covid-19 put the brakes on the economy, the post-pandemic recovery has almost been stymied by the ongoing Russian war on Ukraine and the impending fears of a US recession, contributing negatively to economies around the world. Through the most challenging hurdles, however, the franchise sector in South Africa has remained steadfast in its goals to grow the economy and create jobs. This sector, which employs an estimated 350&nbsp;000, is a rock on which the economy is built.



Statistics from the Franchise Association of South Africa (FASA) estimate that the country’s franchise industry contributes around 15% (R721&nbsp;billion) to gross domestic product (GDP). This figure is&nbsp;the total market value of all finished goods and services produced in&nbsp;the country during a specific period.



Statistics South Africa (Stats SA) revealed that more than 1 000 small businesses shut down in the first six months of 2021. Likewise, the Small Business Institute noted that as many as 70% of small businesses in South Africa fail in the first five years.



Therefore, considering the sector’s strength during tough times, there is evidence that investing in a franchise is one way that entrepreneurs can remain sustainable, get assistance from their franchisor, and ride out any storm.



South Africa’s challenges are many, notwithstanding the uncertainty and loss of business brought about by load-shedding However, with the pandemic having eased amid fears of another variant being forecast by the Department of Health for the end of October, businesses are looking towards speeding up growth opportunities so that they can increase their financial strength.



This takes on greater significance if you consider that in the post-pandemic phase, Stats SA’s Quarterly Labour Force Survey – Q1 2021 showed that the official unemployment rate was 32,6% in the first quarter. FASA labelled unemployment the most significant concern among youth (15 to 34 age bracket). FASA took it a step further, working with partners to transform the industry by working with stakeholders to create franchise opportunities in and around townships in South Africa. Introducing the franchise business model and franchise manager occupational training in and around townships aims to empower and inspire youth to take up franchise opportunities. Such initiatives must be supported because they serve the dual purpose of helping to grow the economy and create jobs.



The government has called on the fuel industry to meet significant transformation objectives in the next five years to ensure essential compliance with the Fuel Liquid Charter and a sustainable enterprise. As a bank, we are proud to have played a vital role in helping drive transformation in the fuel sector in line with these transformation targets for the industry.



Like most other countries, South Africa’s fuel industry is of strategic importance to ensuring energy security and economic growth. According to the South African Petroleum Industry Association, the fuel subsector contributes about 8% to the country’s GDP, which is approximately R300 billion in production output. There are about 5 000 petrol stations across all brands, creating over 700 000 direct and indirect job opportunities that make up 5% of total formal employment in South Africa.&nbsp;Sustained business growth is crucial for expanding any economy, but this growth shouldn’t come at a high cost. By understanding business growth trends that focus on more than increasing the bottom lines, businesses can look ahead with confidence, mainly if backed by a money expert committed to doing good.



As a bank, we have identified four key trends dominating and accelerating business growth in South Africa. Without a doubt, the most important – and a legal imperative – is transformation.



This is an imperative of South Africa, given the country’s history, and one which Nedbank Commercial Banking maintains is advanced not only through ownership, but also through sufficient education, value chain inclusion, job creation and supporting minor and micro-enterprises.



Another critical imperative meant to stimulate growth is understanding that climate resilience speaks to what businesses are doing to contribute to sustaining the environment while ensuring the growth of the economy.



As a bank, we believe that sustainability is broader than climate resilience. While sustainability is essentially about preserving the environment and the responsible use of natural resources, it is also about the upliftment of society. Understanding that this should not negatively impact franchisors and franchisees, but rather help drive business growth positively.



Without a doubt, it has been seen that companies making their mark in the Fourth Industrial Revolution will be those that understand the drivers of value, such as data, artificial intelligence, machine learning, digitisation and e-commerce. Embracing digital tools must be done in a way that ensures that clients continue to enjoy a great experience and receive expert advice whenever they need it.



One superb example of this is Nedbank’s innovative app Avo, which has received plaudits for bringing consumers and businesses together; accurately matching consumers’ lifestyle needs to product and service offerings through powerful artificial intelligence; allowing safe and secure payments, all while providing bank-grade security. Avo has taken the power of selling into the homes of millions of citizens. Whether users need home services, to shop online for groceries, takeaways or great tech deals, or to search for the next family holiday, entertainment options or security solutions, Avo let’s them do it all! The new Avo B2B Marketplace, a digital marketplace for businesses to buy from or sell to other companies, will increase this footprint further.



Inevitably, a robust supply chain is essential to foster business growth. But your banker can help make rands and cents of the current challenges and help unlock opportunities for growth.



The franchise team at Nedbank Commercial Banking can help your business to align with these and other trends to realise growth. Talk to your business manager or contact us at&nbsp;<a href="mailto:%20business@nedbank.co.za" target="_blank" rel="noreferrer noopener">business@nedbank.co.za</a>&nbsp;for more information and assistance.

Karen-Keylock-2

Accelerating business growth in South Africa’s franchise sector

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="728" height="485" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/5K52FDSDWFNOJEMWHZY6GIWIVY.jpg" alt="" class="wp-image-420053" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/5K52FDSDWFNOJEMWHZY6GIWIVY.jpg 728w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/5K52FDSDWFNOJEMWHZY6GIWIVY-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/5K52FDSDWFNOJEMWHZY6GIWIVY-135x90.jpg 135w" sizes="auto, (max-width: 728px) 100vw, 728px" /><figcaption>The International Monetary Fund logo is seen at IMF headquarters in Washington, U.S., October 14, 2017. REUTERS/Yuri Gripas/File Photo</figcaption></figure>



The global economy continues to face steep challenges, shaped by the Russian invasion of Ukraine, a cost-of-living crisis caused by&nbsp;persistent and broadening&nbsp;inflation pressures, and the slowdown in China.



Our <a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDUsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjEwMTEuNjQ5NTIyMDEiLCJ1cmwiOiJodHRwczovL3d3dy5pbWYub3JnL2VuL1B1YmxpY2F0aW9ucy9XRU8vSXNzdWVzLzIwMjIvMTAvMTEvd29ybGQtZWNvbm9taWMtb3V0bG9vay1vY3RvYmVyLTIwMjI_dXRtX21lZGl1bT1lbWFpbCZ1dG1fc291cmNlPWdvdmRlbGl2ZXJ5In0.xBtVeJmAGgXbJvjcd07iMyK-ZW9kKLLtwG7dJU8nSsQ/s/1121717145/br/145541864671-l" target="_blank" rel="noreferrer noopener">global growth forecast</a> for this year is unchanged at 3.2 percent, while our projection for next year is lowered to 2.7 percent—0.2 percentage points lower than the <a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDYsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjEwMTEuNjQ5NTIyMDEiLCJ1cmwiOiJodHRwczovL3d3dy5pbWYub3JnL2VuL1B1YmxpY2F0aW9ucy9XRU8vSXNzdWVzLzIwMjIvMDcvMjYvd29ybGQtZWNvbm9taWMtb3V0bG9vay11cGRhdGUtanVseS0yMDIyP3V0bV9tZWRpdW09ZW1haWwmdXRtX3NvdXJjZT1nb3ZkZWxpdmVyeSJ9.Eonvc3NvnjqBD2i9OMaUQ2_VrJ7J44Bjk4rLRBPrAIY/s/1121717145/br/145541864671-l" target="_blank" rel="noreferrer noopener">July forecast</a>. The 2023 slowdown will be broad-based, with countries accounting for about one-third of the global economy poised to contract this year or next. The three largest economies, the United States, China, and the euro area will continue to stall. Overall, this year’s shocks will re-open economic wounds that were only partially healed post-pandemic. In short, the worst is yet to come and, for many people, 2023 will feel like a recession.



In the United States, the tightening of monetary and financial conditions will slow growth to 1 percent next year. In China, we have lowered next year’s growth forecast to 4.4 percent due to a weakening property sector and continued lockdowns.



The slowdown is most pronounced in the euro area, where the energy crisis caused by the war will continue to take a heavy toll, reducing growth to 0.5 percent in 2023.



Almost everywhere, rapidly rising prices, especially of food and energy, are causing serious hardship for households, particularly for the poor.



Despite the economic slowdown, inflation pressures are proving broader and more persistent than anticipated. Global inflation is now expected to peak at 9.5 percent this year before decelerating to 4.1 percent by 2024. Inflation is also broadening well beyond food and energy. Global core inflation rose from an annualized monthly rate of 4.2 percent at end-2021 to 6.7 percent in July for the median country.



Downside risks to the outlook remain elevated, while policy trade-offs to address the cost-of-living crisis have become more challenging. Among the ones highlighted in our report:



<ul class="wp-block-list"><li>The risk of monetary, fiscal, or financial policy miscalibration has risen sharply amid high uncertainty and growing fragilities.</li><li>Global financial conditions could deteriorate, and the dollar strengthen further, should turmoil in financial markets erupt, pushing investors towards safe assets. This would add significantly to inflation pressures and financial fragilities in the rest of the world, especially emerging markets and developing economies.</li><li>Inflation could, yet again, prove more persistent, especially if labor markets remain extremely tight.</li><li>Finally, the war in Ukraine is still raging and further escalation can exacerbate the energy crisis.</li></ul>



Our <a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDksInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjEwMTEuNjQ5NTIyMDEiLCJ1cmwiOiJodHRwczovL3d3dy5pbWYub3JnL2VuL1B1YmxpY2F0aW9ucy9XRU8vSXNzdWVzLzIwMjIvMTAvMTEvd29ybGQtZWNvbm9taWMtb3V0bG9vay1vY3RvYmVyLTIwMjI_dXRtX21lZGl1bT1lbWFpbCZ1dG1fc291cmNlPWdvdmRlbGl2ZXJ5In0.U2NUrJS1hv1hDIDEYoHFP1koHY0zsTOZBT_f-Egbl-k/s/1121717145/br/145541864671-l" target="_blank" rel="noreferrer noopener">latest outlook</a> also assesses the risks around our baseline projections. We estimate that there is about a one in four probability that global growth next year could fall below the historically low level of 2 percent. If many of the risks materialize, global growth would decline to 1.1 percent with quasi stagnant income-per-capita in 2023. According to our calculations, the likelihood of such an adverse outcome, or worse, is 10 percent to 15 percent.



Cost-of-living crisis



Increasing price pressures remain the most immediate threat to current and future prosperity by squeezing real incomes and undermining macroeconomic stability. Central banks are now laser-focused on restoring price stability, and the pace of tightening has accelerated sharply.



There are risks of both under- and over-tightening. Under-tightening would further entrench inflation, erode the credibility of central banks, and de-anchor inflation expectations. As history teaches us, this would only increase the eventual cost of bringing inflation under control.



Over-tightening risks pushing the global economy into an unnecessarily severe recession. Financial markets may also struggle with overly rapid tightening. Yet, the costs of these policy mistakes are not symmetric. The hard-won credibility of central banks could be undermined if they misjudge yet again the stubborn persistence of inflation. This would prove much more detrimental to future macroeconomic stability. Where necessary, financial policy should ensure that markets remain stable. However, central banks need to keep a steady hand with monetary policy firmly focused on taming inflation.



Formulating the appropriate fiscal response to the cost-of-living crisis has become a serious challenge. Let me mention a few key principles.



First, fiscal policy should not work at cross-purpose with monetary authorities’ efforts to bring down inflation. Doing so will only prolong inflation and could cause serious financial instability, as recent events illustrated.



Second, the energy crisis, especially in Europe, is not a transitory shock. The geopolitical realignment of energy supplies in the wake of the war is broad and permanent. Winter 2022 will be challenging, but winter 2023 will likely be worse. Price signals will be essential to curb energy demand and stimulate supply. Price controls, untargeted subsidies, or export bans are fiscally costly and lead to excess demand, undersupply, misallocation, and rationing. They rarely work. Fiscal policy should instead aim to protect the most vulnerable through targeted and temporary transfers.



Third, fiscal policy can help economies adapt to a more volatile environment by investing in productive capacity: human capital, digitalization, green energy, and supply chain diversification. Expanding these can make economies more resilient to future crises. Unfortunately, these important principles are not always guiding policy right now.



Effects of a strong dollar



For many emerging markets, the strength of the dollar is a major challenge. The dollar is now at its strongest since the early 2000s, although the appreciation is most pronounced against currencies of advanced economies. So far, the rise appears mostly driven by fundamental forces such as tightening US monetary policy and the energy crisis.



The appropriate response in most emerging and developing countries is to calibrate monetary policy to maintain price stability, while letting exchange rates adjust, conserving valuable foreign exchange reserves for when financial conditions really worsen.



As the global economy is headed for stormy waters, now is the time for emerging market policymakers to batten down the hatches.



Eligible countries with sound policies should urgently consider improving their liquidity buffers, including by requesting access to precautionary instruments from the Fund. Countries should also aim to minimize the impact of future financial turmoil through a combination of preemptive macroprudential and capital flow measures, where appropriate, in line with our&nbsp;<a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMTIsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjEwMTEuNjQ5NTIyMDEiLCJ1cmwiOiJodHRwczovL3d3dy5pbWYub3JnL2VuL1RvcGljcy9JUEYtSW50ZWdyYXRlZC1Qb2xpY3ktRnJhbWV3b3JrP3V0bV9tZWRpdW09ZW1haWwmdXRtX3NvdXJjZT1nb3ZkZWxpdmVyeSJ9.lPYzk9igGxQVNoyO071v9ldHmg5V-zWZtj8ILK0xwAY/s/1121717145/br/145541864671-l" target="_blank" rel="noreferrer noopener">Integrated Policy Framework</a>.



Too many low-income countries are in or near debt distress. Progress toward orderly debt restructurings through the&nbsp;<a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMTMsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjEwMTEuNjQ5NTIyMDEiLCJ1cmwiOiJodHRwczovL3d3dy5pbWYub3JnL2VuL0Jsb2dzL0FydGljbGVzLzIwMjEvMTIvMDIvYmxvZzEyMDIyMXRoZS1nMjAtY29tbW9uLWZyYW1ld29yay1mb3ItZGVidC10cmVhdG1lbnRzLW11c3QtYmUtc3RlcHBlZC11cD91dG1fbWVkaXVtPWVtYWlsJnV0bV9zb3VyY2U9Z292ZGVsaXZlcnkifQ.GGvRq8rucqnSFuEvFBvhXMgyI-wh78SKlLbyhfB_agU/s/1121717145/br/145541864671-l" target="_blank" rel="noreferrer noopener">Group of Twenty’s Common Framework</a>&nbsp;for the most affected is urgently needed to avert a wave of sovereign debt crisis. Time may soon run out.



The energy and food crises, coupled with extreme summer temperatures, are stark reminders of what an uncontrolled climate transition would look like. Progress on climate policies, as well as on debt resolution and other targeted multilateral issues, will prove that a focused multilateralism can, indeed, achieve progress for all and succeed in overcoming&nbsp;<a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMTQsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjEwMTEuNjQ5NTIyMDEiLCJ1cmwiOiJodHRwczovL3d3dy5pbWYub3JnL2VuL0Jsb2dzL0FydGljbGVzLzIwMjIvMDUvMjIvYmxvZy13aHktd2UtbXVzdC1yZXNpc3QtZ2VvZWNvbm9taWMtZnJhZ21lbnRhdGlvbj91dG1fbWVkaXVtPWVtYWlsJnV0bV9zb3VyY2U9Z292ZGVsaXZlcnkifQ.3p002h7bluo72Fpw2feMxw94S2WhDsL0_vZZTtZxSlA/s/1121717145/br/145541864671-l" target="_blank" rel="noreferrer noopener">geoeconomic fragmentation</a>&nbsp;pressures.

FILE PHOTO: The International Monetary Fund logo is seen at IMF headquarters in Washington

Policymakers Need Steady Hand as Storm Clouds Gather Over Global Economy

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="816" height="800" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-816x800.jpg" alt="" class="wp-image-420082" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-816x800.jpg 816w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-300x294.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-92x90.jpg 92w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-768x753.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-1536x1506.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-scaled.jpg 2048w" sizes="auto, (max-width: 816px) 100vw, 816px" /><figcaption>William Asiko, Vice President of the Africa Region Office, The Rockefeller Foundation</figcaption></figure>



The devastating floods in Pakistan have affected 33 million people, many of whom are among the country’s most vulnerable. Closer to home, millions of people in the greater Horn of Africa face hunger and starvation as the region faces one of its worst droughts in decades.



At the same time, the war in Ukraine has highlighted the global north&#8217;s continued dependence on fossil fuels and their vulnerability to energy insecurity. Energy prices have risen steeply since early 2022, exposing &#8216;Europe&#8217;s economies strategic and ethical dilemma.



While in a meaningful way, climate change requires a collaborative global agenda, Africa is not currently at the table, and the positions being taken in Africa are largely reactive. We must change the narrative from Africa being victims of climate change requiring help, to Africa, a champion of climate action and mitigation.



As citizens of Africa, we have been conditioned to believe we are helpless in a global world. It is time to take back control, write our narrative and be the masters of our destiny. Coupled with having the youngest and fastest growing population on earth, we have enormous untapped opportunities to place us firmly at the table of the climate debate.



<h2 class="wp-block-heading" id="h-africa-s-twin-challenges">Africa&#8217;s Twin Challenges</h2>



Africa contributes less than 4% of global greenhouse gas (GHG) emissions. Despite being a minor contributor to global emissions, the continent is among the most vulnerable to its negative effects. Our low emissions are often positioned on the worldwide stage in a positive light; however, it has come at a developmental cost – Africa&#8217;s twin challenges.



Firstly, Africa did not become a low emitter by choice, or knowingly embark on an intentional journey towards climate action. Our low emissions are symptomatic of significant underinvestment in power generation and infrastructure over the years.



Secondly, due to this low investment, there is a severe lack of access to reliable electricity on the continent. Earlier this year, a report released by the International Energy Agency (IEA) said 600 million people living in Africa, or 43% of the continent&#8217;s population, lack access to reliable electricity.



Energy, in general, underpins economic growth, and reliable access to electricity is crucial to Africa&#8217;s development. No country in the world has eliminated poverty without first eliminating energy poverty.&nbsp; Africa&#8217;s rapidly growing population will require a reliable energy supply to power industrial production, electrify households and expand the use of transport to drive economic activity. Therefore, Africa&#8217;s position on the global stage as it relates to climate action, must also address the twin challenges of a lack of electricity and investment in its generation.



<h2 class="wp-block-heading">The African Opportunity</h2>



I am convinced that Africa can develop a narrative that attracts people to want to engage us on climate action on a win-win basis. With this outcome in mind, our narrative should include three elements. Firstly, we have an enormous opportunity to develop carbon credit programs on the continent, many success stories can be scaled, and new ones developed. This is largely within our control through policy commitments and appropriate incentives. &nbsp;Developers are looking for bankable opportunities but require policymakers to create an environment which attracts investment into this space.



Several organizations have launched an initiative to establish a concrete action plan to stimulate the production of carbon credits across the continent at scale. By COP 27 in Sharm El-Sheikh, Egypt this November, we hope to see an overall ambition for voluntary carbon markets in Africa established, lighthouse projects identified, and a concrete roadmap for the years ahead developed. If successful, it will radically reduce the time it takes to generate credits, increase the underlying quality of African carbon credits enabling them to command a price premium, and significantly increase the volume of credits.



Secondly, we have limitless untapped renewable energy sources. We require a policy regime that encourages the private sector, both foreign and domestic, to invest in demonstrably profitable renewable energy projects. The IEA has noted that renewables, including solar, wind, hydropower, and geothermal, could account for over 80% of Africa&#8217;s new power generation capacity by 2030. While our continent is home to 60% of the best solar resources globally, we only have 1% of the world&#8217;s installed solar energy capacity. In the medium to long-term, Africa has an immense opportunity to produce and export green energy to sunshine-poor northern climates.



The Rockefeller Foundation, IKEA Foundation, and Bezos Earth Fund joined forces to launch the Global Energy Alliance for People and Planet (GEAPP) at COP26 and is already working to deliver transformational programs in partnership with countries across Africa. With national governments, GEAPP leverages its convening power, distinct and rare philanthropic capital, expertise, and a network of 18 Alliance partners to design, finance, and execute renewable energy projects.



Finally, our narrative needs to take account of our abundance of labour that is willing and able to work on these projects. 60% of our continent&#8217;s population is under the age of 25, with a median age of 19 years. We are also facing rapid urbanization, with Africa&#8217;s urban population expected to nearly triple to over 1.3 billion people by 2050, who will need access to goods, services, and job opportunities.



<h2 class="wp-block-heading">Time for Action</h2>



There is a vital role for both the public and private sectors to play on this journey. The public sector controls policy and the legislative agenda – a considerable part of what is required to get this done. They also maintain relationships with some of the world&#8217;s biggest most prominent development finance institutions. Ultimately, their responsibility is to create a conducive environment for large-scale investments. This could include tax breaks for those investing in renewables, permitting the repatriation of profits for foreign investors, and coming to market with bankable projects with the necessary approvals and government support.



The private sector brings with it commercial capital, expertise, and innovation. Therefore, the two sectors need to work in mutually beneficial harmony. They need to come together and develop a harmonious agenda so that the private sector invests at scale to benefit our people.&nbsp; Philanthropy can be a great convener and facilitator of this.



Africa&#8217;s starting point on this journey is developing a new, bold narrative. The Rockefeller Foundation could play an important role as a convenor that brings stakeholders together to discuss the issues and develop a coherent narrative that accurately depicts Africa as it exists right now. We could also share this with the relevant institutions to secure important buy-ins to make this a successful endeavour for the people of Africa



A common, realistic position adopted by African states that paints us in a positive light, not as victims, but as key role players in addressing climate change, will help shift dynamics and ensure that we take our rightful seat at the table in global discussions. We want the world to see Africa as the best investment destination for green energy projects and carbon credit programs with our limited natural resources and abundant labour. It is up to us Africans to realize this potential and become champions in the climate debate.

This Was Captured by Tintseh

Africa Must Position Itself as a Champion of Climate Action

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/28334431792_0f328c02ec_b-820x547.jpg" alt="" class="wp-image-410222" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/28334431792_0f328c02ec_b-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/28334431792_0f328c02ec_b-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/28334431792_0f328c02ec_b-120x80.jpg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/28334431792_0f328c02ec_b-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/28334431792_0f328c02ec_b.jpg 1024w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Woman Using a Hoe to Till the Soil on Small Tanzania Farm
Photo: via Flickr</figcaption></figure>



To understand the real challenges of farmers, it is necessary to spend a considerable amount of time on the ground talking to farmers and to get a better feel of the markets. In such engagements in the last week of August 2022, one theme that came up time and again in most discussions with role players in the sector, is the need for the diversification of the export markets to non-traditional regions while retaining the sector’s foothold in key markets such as the European Union.



Other issues that keep farmers sitting up and scratching their heads at night are the need to improve logistics – roads, rail and ports; expansion of agricultural finance, particularly developmental finance or flexible finance products for the new entrant farmers, and strengthening of trust between government and the industry. Let us look at these themes in turn.



Firstly, the need to export markets has become even more urgent as agricultural output consistently improves and the country has limited capacity to absorb new produce. South Africa already exports half of its produce, in value terms. Therefore, the efforts of the Agriculture and Agro-processing Master Plan to boost production have to emphasize the expansion of the export markets.



Japan, China, India, Saudi Arabia, Bangladesh, Philippines and South Korea are amongst some of the key markets in which South African agribusinesses are interested in expanding their presence. Recent actions from the EU and China (two of the largest export destinations currently) to place non-tariff barriers, hurting South Africa&#8217;s interests and export activities, highlight the importance of diversifying destination markets.



Resolving the non-tariff barriers challenge or expansion to new markets is not a job of the private sector or organized agriculture alone. The government should work hand-in-hand with the industry stakeholders in creating a &#8220;South Africa Inc.&#8221; plan for widening exports. The building blocks for such a plan are already in the agriculture and agro-processing master plan. Still, given the urgency of this matter, South Africa needs a dedicated working group that will champion the expansion of the country&#8217;s agriculture exports and work towards servicing the existing markets to avoid challenges such as the constraints faced by the citrus industry in the EU or wool in China.



Secondly, the need for network industries&#8217; improvements was highlighted as there haven&#8217;t been material improvements, particularly on roads. The agricultural sector role-players are in regular conversations with Transnet regarding the effectiveness and efficiency of the ports. So far, Transnet has been open to engagements and efficient in resolving challenges such as rebuilding the port of Durban following the destructive floods.



Going forward, private sector role players want to explore possibilities of better partnerships in the various nodes of the ports, which could help improve efficiencies, not only for agriculture but a range of industries such as mining and automobile, amongst others.



Thirdly, agricultural finance is another topic that has received attention in various engagements. This encompasses the Blended Finance programme led by the Department of Agriculture, Land Reform and Rural Development, which should be open to all agribusinesses and financial institutions, and separately, the Land Bank, which could also play a key role in supporting the new entrant farmers to the sector, as well as the existing commercial farmers. This area will require increased focus during phase two of implementing the agriculture and agro-processing master plan. Still, the Blended Finance instrument from the government should include all agribusinesses and financial institutions in the sector.



At the same time, the government should also support the reform of a critical developmental finance institution i.e., the Land Bank, which has a long history in the sector. The goal should be to build agricultural finance instruments that help grow the agriculture and agribusiness sectors of &#8220;South Africa Inc.&#8221;.



Fourthly, the broad issue of &#8220;trust&#8221;, &#8220;accountability&#8221;, as well as &#8220;monitoring and evaluation&#8221; are all key to building credibility. This is trust amongst the sector role-players and with the government. The first step in building trust will be to deliver on promises or various aspects affecting the sector.



The government can lead in this effort by implementing reforms outlined in the agriculture and agro-processing mater plan, particularly the parts that do not require capital spending but legislative amendments.



These could be aspects of <a href="https://www.gov.za/documents/agricultural-product-standards-act-6-mar-2015-1127#:~:text=The%20Agricultural%20Product%20Standards%20Act,for%20matters%20connected%20therewith.">Agricultural Product Standards Act 119 of 1990</a> (around the thorny issue of assignees that the industry does not desire or view as value adding to the sector) and aspects of the need for the modernization of the <a href="https://www.gov.za/documents/fertilizers-farm-feeds-seeds-and-remedies-act-28-may-2015-1101">Fertilizers, Farm Feeds, Seeds and Remedies Act 36 of 1947</a> (there is already work underway, which could be accelerated), and intensify efforts to open more export markets for South African agriculture, as a few examples. One can summarize this as the following, which are points we made sometime in 2021:&nbsp;&nbsp;



What should the government/DALRRD do in the near term?



What should the private sector do?



These are not exhaustive but we believe are interventions that could move the needle in terms of translating the ideas on paper in various plans into tangible projects that could contribute to the growth and job creation in South Africa&#8217;s agriculture.



In sum, South Africa&#8217;s agricultural sector faces numerous challenges, which are now well understood by both the government and various industry stakeholders. South Africa needs a plan of action, particularly on the four areas of interventions that were consistently outlined in various farmer and agribusinesses engagements we had this past week.



Notably, these haven&#8217;t changed from aspects that bothered sector role-players a year ago, which means we haven&#8217;t moved the needle. As agriculture is one of the sectors that will help grow the economy, there needs to be increased attention on the reforms necessary to unlocking the inclusive growth, and consequently job creation.&nbsp;



Wandile Sihlobo is chief economist of the Agricultural Business Chamber of South Africa (Agbiz) and author of “<a href="https://www.amazon.com/Finding-Common-Ground-Equity-Agriculture-ebook/dp/B084G1XS88">Finding Common Ground: Land, Equity and Agriculture</a>”.

28334431792_0f328c02ec_b

Challenges that keep South African farming community up at night

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="235" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-820x235.png" alt="" class="wp-image-419861" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-820x235.png 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-300x86.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-160x46.png 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-768x220.png 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image.png 1374w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>(Photo: Artush/iStock by Getty Images)</figcaption></figure>



The toll of extreme weather events on crops underscores the region’s challenges and need for policies to save lives and protect livelihoods.



Climate change is intensifying food insecurity across sub-Saharan Africa, where Russia’s war in Ukraine and the pandemic are also adding to food shortages and high prices. Climate events, which destroy crops and disrupt food transport, are disproportionately common in the region. One-third of the world’s droughts occur in sub-Saharan Africa, and Ethiopia and Kenya are enduring one of the worst in at least four decades. Countries such as Chad are also being severely impacted by torrential rains and floods. The resulting rise in poverty and other human costs are compounded by cascading macroeconomic effects, including slower economic growth. A new IMF policy paper examines how fiscal and financial policies and reforms such as technology transfer can reduce this damage and help countries adapt.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="800" height="800" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-1-800x800.png" alt="" class="wp-image-419862" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-1-800x800.png 800w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-1-300x300.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-1-90x90.png 90w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-1-768x768.png 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-1.png 880w" sizes="auto, (max-width: 800px) 100vw, 800px" /></figure>



Food supplies and prices are especially vulnerable to climate change in sub-Saharan Africa because of a lack of resilience to climatic events, food import dependence, and excessive government intervention. Most people live in rural agricultural and fishing communities that can’t afford infrastructure to protect them from adverse weather. For example, they depend on rain to water their crops, and less than 1 percent of arable land is equipped with irrigation. Weather-sensitive domestic food production results in heavy reliance on imports, with some 85 percent coming from outside the region. While food imports can provide a buffer to domestic shocks, inflation spurred by weather shocks in regions where imports are produced can be passed on to consumers. Similarly, weather events that raise the cost of transportation are also passed on. The resulting high food-import costs can erode foreign reserves and weigh on exchange rates, contributing to more rapid price gains.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="800" height="800" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-2-800x800.png" alt="" class="wp-image-419863" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-2-800x800.png 800w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-2-300x300.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-2-90x90.png 90w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-2-768x768.png 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-2.png 867w" sizes="auto, (max-width: 800px) 100vw, 800px" /></figure>



Against this backdrop, governments often try to help by intervening in agricultural production and food distribution. Untargeted interventions can be inefficient and weigh on national budgets, inflate food prices, impede competition, and reduce crop yields. For example, price controls and numerous and lengthy regulatory processes contribute to shortages by disincentivizing food production, storage, and trade. Similarly, subsidies for fertilizer and seeds drive overuse and suppress crop diversification. On the other hand, targeted government involvement can have merit, such as supporting research and development in building resilience and agricultural productivity. Prioritizing policies around those that best protect the poor will be key amid financing and capacity constraints.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="800" height="800" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-3-800x800.png" alt="" class="wp-image-419864" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-3-800x800.png 800w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-3-300x300.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-3-90x90.png 90w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-3-768x768.png 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/image-3.png 867w" sizes="auto, (max-width: 800px) 100vw, 800px" /></figure>



Fiscal and financial policies Protecting food production and distribution from weather events begins with climate-resilient infrastructure. This type of public investment also creates jobs and can catalyze private investment. Consider, for example, solar power that facilitates irrigation, water access, and temperature control for food storage. Equally impactful is a flood barrier that protects ports and roads critical to food distribution.



Digitalization is also crucial. It gives farmers access to early warning systems and mobile banking as well as platforms to purchase fertilizers, seeds, or sell produce, helping to connect small producers to large vendors. Social cash transfers that are targeted and far-reaching help people buy food and rebuild after weather shocks. They further allow families and small businesses to invest in resilience-building equipment and technology. By offering people control of the support they receive these cash transfers are more effective at containing inequality than agricultural subsidies. Access to finance from private markets can play a similar role to social assistance. Raising it requires developing financial markets, which can take time. In the interim, micro-finance or public-private partnerships can help provide credit to people who currently don’t have access through banks. To this end, establishing collateral through advances in property rights is crucial. With World Bank support, Mozambique and Tanzania are expanding title and survey registers and developing digital land administrative services. A pilot project in Ghana uses blockchain technology to improve incomplete or missing land records. Cost-effective structural reforms Trade liberalization and import diversification could help stabilize regional food supply and prices. Zambia’s big maize harvests, for example, could have helped offset shortfalls elsewhere in Southern Africa if not for a ban on exporting the crop. Access to larger markets can incentivize investment in agricultural production networks and value chains. It can also help spread knowledge—such as how to plant drought-resistant crops—and spur competition. One positive step in this direction is the Africa Continental Free Trade Agreement among 54 countries, which covers most goods and services. Empowered producer organizations can reach remote climate-vulnerable agricultural communities. This would help spread new technologies such as digital pest-control devices and high-yield seeds that tolerate heat and drought and improve climate adaptation training and market information. Aggregating production and selling directly to consumers can help to increase negotiating power, which in turn reduces storage costs, lengthens contracts, expands profit margins and opens access to new markets. By streamlining and better targeting regulations, governments can help farmers build resilience. For example, appropriate water-use regulations reduce the cost for farmers to establish and expand irrigation systems. Along the same lines, efficient seed registration, like in Kenya, multiplies seed supply and access to resilient seeds. Finally, fertilizer testing, labeling, and registration requirements help farmers access contaminant-free fertilizers appropriate for specific weather shocks, soil, and crops.



Financing, capacity development, and transfer of technology and know-how will be key to supporting the policies outlined above. With mounting debt and limits to raising taxes, countries in sub-Saharan Africa will need grants and concessional finance. Development partners can also support resilience-building research and can propagate climate and financial literacy. The IMF is supporting countries in these efforts including through climate-oriented public financial management advice and lending facilities such as our Resilience and Sustainability Trust. Soon to be operational, this new lending facility will provide longer-term affordable financing to address climate change and other challenges.

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How Africa Can Escape Chronic Food Insecurity Amid Climate Change

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="615" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/Africa-planting-820x615.jpg" alt="" class="wp-image-419620" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/Africa-planting-820x615.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/Africa-planting-300x225.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/Africa-planting-120x90.jpg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/Africa-planting-768x576.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/Africa-planting-1536x1152.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/Africa-planting.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



By Agnes Kalibata, President of AGRA &amp; Claudia Sadoff, Executive Managing Director of CGIAR



The repercussions of the global food crisis, coupled with a protracted drought and a challenging pandemic recovery, make the forthcoming harvest season in many parts of Africa even more critical for governments and farmers.



With more than&nbsp;<a href="https://www.who.int/news/item/02-08-2022-who-launches-appeal-to-respond-to-urgent-health-needs-in-the-greater-horn-of-africa" target="_blank" rel="noreferrer noopener">37.5 million</a>&nbsp;people across the Horn of Africa alone on the verge of selling their possessions to be able to afford basic nourishment, the proper functioning of food systems to harvest, process and distribute food is presently a matter of life or famine.



At the same time, today’s “<a href="https://news.un.org/en/story/2022/04/1116152" target="_blank" rel="noreferrer noopener">perfect storm</a>” will not be the last to upend African agriculture and food security, as climate change continues to bring yet more unpredictability, demanding constant innovation.



There is a window of opportunity, small as it might be, in the next three to 12 months for African decision-makers to invest shrewdly in scaling up proven solutions that can both avert the worst of the current crisis and build long-term resilience.



In recent decades, our two organisations have worked closely with national partners to develop, test and deploy innovations that improve smallholder productivity, livelihoods and resilience to shocks in line with&nbsp;the African Union’s Comprehensive African Agricultural Development Programme (CAADP) Malabo Commitments.



African countries now urgently need to fast-track the uptake of agricultural solutions with the greatest potential for immediate impact as well as lasting sustainability at the scale of millions of farmers.



Several innovations – if deployed now – could offer immediate benefit from high-yield, nutrient-dense and drought-resistant varieties, to better agronomy and soil management. At the same time, real-time monitoring of food and input price volatility can best inform effective regional and national policy responses.



CGIAR has done extensive research in food and input price volatility monitoring, with the&nbsp;<a href="https://www.foodsecurityportal.org/tools/excessive-food-price-variability-early-warning-system" target="_blank" rel="noreferrer noopener">Excessive Food Price Volatility Early Warning System</a>, and&nbsp;<a href="https://www.foodsecurityportal.org/tools/COVID-19-food-trade-policy-tracker" target="_blank" rel="noreferrer noopener">Food and Fertilizer Export Restrictions Tracker</a>, developed by the International Food Policy Research Institute (IFPRI), helping international agencies to identify and coordinate around areas of concern.



At a country level, AGRA translates this information alongside other sources into an easy-to-use monthly Food Security Monitor for policymakers.



However, current monitoring tools and early warning systems cannot yet precisely assess the impacts of global shocks on&nbsp;domestic food security&nbsp;and nutrition, or the impacts of domestic shocks at the household level.



Scaling up the model for real-time tracking, while also developing more country-specific analyses, would equip governments with the data needed to minimize disruption to food supplies, direct food assistance programs, and anticipate malnutrition or social unrest.



Similarly, improved, high-yield and underutilized local crops are another weapon in the arsenal that can be deployed at a greater scale both to fill production and nutrition gaps now while also reducing dependence on a handful of staple cereals and food imports in the long-term.



The&nbsp;<a href="https://taat-africa.org/wp-content/uploads/2020/12/TAAT-Wheat-Compact.pdf" target="_blank" rel="noreferrer noopener">wheat compact</a>&nbsp;under the Technologies for African Agricultural Transformation (TAAT) initiative, supported by the African Development Bank and implemented by CGIAR, has already deployed more than 30 heat tolerant varieties benefitting 1.5 million people. Further gains are planned under&nbsp;<a href="https://www.iita.org/news-item/stakeholders-prepare-for-taat-2-after-a-successful-first-phase/" target="_blank" rel="noreferrer noopener">TAAT II</a>&nbsp;in support of CAADP while the Center of Excellence in Africa&#8217;s Seed Systems (CESSA) launched by AGRA provides an opportunity for countries to strengthen seeds systems.



Finally, innovations that address and fill the&nbsp;<a href="https://www.cgiar.org/news-events/news/the-missing-link-making-women-part-of-the-response-to-the-global-food-crisis" target="_blank" rel="noreferrer noopener">gender gap</a>&nbsp;in African agriculture can have an instant impact by fully leveraging the extensive role of women as producers, entrepreneurs, caregivers and mothers.



Research indicates that farm yields would increase by&nbsp;<a href="http://www.fao.org/news/story/en/item/52011/icode/" target="_blank" rel="noreferrer noopener">up to 30 per cent</a>&nbsp;and hunger would fall by up to 17 per cent if women had the same access to productive resources as men.



AGRA’s&nbsp;<a href="https://agra.org/value4her/" target="_blank" rel="noreferrer noopener">VALUE4HER</a>&nbsp;initiative includes&nbsp;Africa’s first digital marketplace designed for women, who own a third of small and medium enterprises, and&nbsp;provides a network for market access, training and collective action. In the platform’s first two&nbsp;years, a total of 165 women-led businesses reported&nbsp;<a href="https://www.cta.int/en/legacy/VALUE4HER" target="_blank" rel="noreferrer noopener">increased incomes</a>&nbsp;as a result of improved market access and enhanced technical business management skills,&nbsp;which becomes especially important in times of crisis.



And part of CGIAR’s new research portfolio is the&nbsp;<a href="https://www.cgiar.org/initiative/11-excellence-in-agronomy-eia-solutions-for-agricultural-transformation/" target="_blank" rel="noreferrer noopener">Excellence in Agronomy</a>&nbsp;initiative, which aims to unite 20 public and private partners to reach a million farmers with gender-responsive agronomic solutions. This is one of CGIAR’s 32 new initiatives that include a scaling component to ensure new and existing innovations get into the hands of farmers.



The unexpected events of the past two years have significantly altered the trajectory of Africa’s agricultural development. From accelerating the&nbsp;<a href="https://agra.org/news/role-of-digital-agricultural-tools-during-pandemic/" target="_blank" rel="noreferrer noopener">digitalisation</a>&nbsp;of marketplaces and on-farm training during the pandemic to forcing countries to seek wheat and fertiliser alternatives in the ongoing Ukraine conflict, necessity has triggered urgent innovation to adapt to evolving circumstances.



As the most important actors in African agriculture unite at the&nbsp;<a href="https://agrf.org/" target="_blank" rel="noreferrer noopener">African Green Revolution Forum</a>&nbsp;(AGRF) in Kigali, we must now zone in on the tried and tested solutions that can protect the most vulnerable and develop the strategies to maximise them with utmost urgency.

Africa-planting

Africa must fast-track adoption of proven and sustainable solutions to survive food crisis

South Africa’s franchise sector has shown tremendous resilience, first withstanding the heaviest effects from economic lens of the COVID-19 pandemic, secondly, looking at how global economies, suffered from the knock-on effect of the Russian war in the Ukraine.



As the economy in South Africa continues to struggle, worsened by the recent floods in KwaZulu-Natal, as well as the riots in the province a year ago, much hard work remains to help turn the corner.



But if there is a sector which has shone the light in the toughest of times in the country, it is the franchise sector, given its strong contribution to the economy, particularly when it comes to creating jobs. A conservative estimate is that the franchise industry annually employs around 350 000 people.



Furthermore, according to the Franchise Association of South Africa, the country’s franchise industry contributes around 15% (R721&nbsp;billion) to the Gross Domestic Product (GDP), a figure made up of&nbsp;the total market value of all finished goods and services produced in&nbsp;the country during a specific period.



Previously, the Small Business Institute, noted that as many as 70% of small businesses in South Africa failed in the first five years. Given the contribution of the franchise sector, there is a strong argument for entrepreneurs to go this route as one would be operating in an established business, backed by expert financial advice.



In a country recovering from the pandemic, after the effects of several economic challenges, especially the disruptive state of load-shedding, certainty and the backing of an established franchisor would help the national goals of creating jobs and growing the economy.



This is imperative if we consider that according to StatSA’s Quarterly Labour Force Survey – Q1 2021, the official unemployment rate was 32,6% in the first quarter. Of greater concern is that the survey shows the official unemployment rate among youth (15 – 34 years) was 46,3 % in quarter 1 2021 and the rate was 9,3% among university graduates. Fred Makgato, head of the industry body, the Franchise Association of South Africa (FASA), warned that youth unemployment is a serious threat to the country’s economy.



But FASA has taken it further instead of being alarmist with a commendable strategic decision to transform the industry, working stakeholders to create franchise opportunities in and around townships of South Africa. The introduction of the franchise business model, along with franchise manager occupational training, in and around townships, is aimed at empowering and inspiring youth to take up franchise opportunities.



Such initiatives must be supported, as they serve dual purpose of helping to grow the economy and create jobs. Above all, it promises that after a tough few years the franchise sector will once more show its adaptability taking the country positively into new terrain.



As a bank, we have been proud to play a key role in helping to drive transformation, especially in the fuel sector, as set by the country’s transformation targets for the industry. Government has called on the fuel industry to meet significant transformation objectives within the next five years – not only to ensure basic compliance with the Fuel Liquid Charter, but also to ensure a sustainable industry.



Like most other countries, the fuel industry in South Africa is of strategic importance to ensure energy security and economic growth. According to the South African Petroleum Industry Association, the fuel subsector contributes about 8% to the country’s gross domestic product, which is approximately R300 billion in production output. There are about 5 000 petrol stations across all brands, creating over 700 000 direct and indirect job opportunities that make up 5% of total formal employment in South Africa.



Although the liquid-fuel industry is highly regulated with government dictating the petrol price, black entrepreneurs still face challenges such as access to infrastructure, finance, and markets. It is important to shape transformation in a holistic manner and to encourage greater market integration, removing obstacles that thwart competition and entry into the industry orderly, but swiftly.



Businesses are faced with the realisation that transformation is more than just a compliance exercise. They must now also look at ways to add sustainable value to the lives of historically disadvantaged South Africans through empowerment initiatives.



Ultimately, to achieve greater economic equality, key players in the industry must promote greater responsibility towards economic, political, and social objectives, driven by progressive, principled thought and positions. Our partnerships with various oil companies, new entrants and black-owned, have helped advance and enable transformation in this industry. At Nedbank this is conducted through a dedicated, centralised&nbsp;service for franchisors with strategic relationship development underpinned by tailored funding options.



As a bank we have already engaged with players in the fuel sector, for example. to collaborate on which the funding structure is most viable and beneficial to new entrants. An example of this is the flagship fuel-franchising partnership with PetroCONNECT, which was co-founded by Mark Harper and Sbonelo Mbatha, two individuals who have demonstrated the willingness and ability to address challenges in relation to sustainability, ownership, and transformation within the energy sector.



Our role at Nedbank is to enable through expert financial advice, players in the franchise industry to transform, focussing on those who are serious about achieving transformation goals with the greater good of the sector, growing the economy and creating jobs.



It’s the only way to go!



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="581" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-820x581.jpg" alt="" class="wp-image-419263" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-820x581.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-300x213.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-127x90.jpg 127w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-768x544.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-1536x1088.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Karen Keylock, Nedbank, National Franchise Manager</figcaption></figure>

Transformation is key for fuel industry that must grow the economy and create jobs

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="429" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/HP-Image-1200x628-1-820x429.jpg" alt="" class="wp-image-419109" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/HP-Image-1200x628-1-820x429.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/HP-Image-1200x628-1-300x157.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/HP-Image-1200x628-1-160x84.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/HP-Image-1200x628-1-768x402.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/HP-Image-1200x628-1.jpg 1200w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



HP has revealed the results of its first education-focused survey in Africa, which sheds light on teachers’ skillsets and how learning experiences for students can be improved in South Africa and Nigeria. The research supports HP’s education programme in Africa, which aims to provide the right technology and skills to the education sector.



As the effects of the pandemic continue to be felt on the education system, schools must navigate the imperative to catch up with national curriculums whilst providing future-proof classrooms and learning environments.



“Teachers perform a pivotal function in our society, not only in shaping the minds of future leaders and preparing students to take on the jobs of the future, but also inspiring and enabling better learning outcomes,” says Brad Pulford, Managing Director of HP Africa.



Understanding the realities of 21st-century teaching, 10 skills were identified in the study as crucial to future proofing learning. The majority (7 in 10) of teachers surveyed agreed that creative, innovative, critical, and entrepreneurial thinking, as well as digital literacy, are very important.



Crucially, one in three teachers say they could benefit from additional training to improve their skills in the above-mentioned areas, and that the development would have an enormous impact on the pedagogy.



Access to adequate resources and technology is key



Educators face numerous challenges which can negatively affect teaching outcomes, such as a lack of basic materials. 82% of teachers surveyed noted access to instructional materials and supplies as a problem, and a further 89% said access to adequate technological resources is an issue – a crucial aspect of teaching that has been overlooked for over a decade but has been brought to the fore by the pandemic.



Still, an overwhelming majority, 95%, believes that technology can have a positive benefit in the teaching environment and can raise learners’ engagement in lessons.



The Covid-19 pandemic thrust the importance of technology in classrooms into the spotlight, bringing new opportunities and pressures to teachers around the world. The shift has not been without difficulties, with 45% teachers ranking ICT skills as a challenging facet of the role – outpacing other elements like active teaching, homework marking and lesson planning. At the same time, 85% of survey respondents confirmed new skills in this area would have the greatest influence in their ability to teach.



Beyond technology, at least 50% of teachers report having too many learners in their classrooms which impedes quality learning, and 71% say they require more time to assist individual learners. Luckily, despite these challenges at least 95% of teachers are optimistic about their jobs and roles in shaping the future leaders of tomorrow.



<h2 class="wp-block-heading" id="h-fit-for-purpose">Fit for purpose</h2>



HP’s Innovation and Digital Education Academy (<a href="https://www.hp.com/emea_africa-en/solutions/education/idea-fellows.html">HP IDEA</a>) programme plays a critical role to bridge the skills gap – in fact, it forms part of HP’s goal to accelerate digital equity for 150 million people by 2030.



This immersive teacher development programme is designed to enable educators to develop and access new learning modalities in select schools in South Africa, Nigeria, and other 14 markets across Africa, the Middle East, and Central Asia.



“Through the <a href="https://www.hp.com/emea_africa-en/solutions/education/idea-fellows.html">HP IDEA</a> programme, our aim is to ensure that educators are equipped with the latest tools and best practices in teaching and learning, and ensure they too are ‘future-fit’. Understanding the educational landscape and where we can provide support and expertise is key to its success,” Pulford adds.



Pulford concludes: “We aim to expand and evolve HP IDEA through partnerships with local governments and complementary support for educators to ensure that drives results in the lives of pupils – collective action will make a real impact.”

HP-Image-1200×628-1

African teachers want to become future-fit with more “soft skills” training

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="616" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/9608668646_bc3d79cacb_b-1-820x616.jpg" alt="" class="wp-image-419082" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/9608668646_bc3d79cacb_b-1-820x616.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/9608668646_bc3d79cacb_b-1-300x225.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/9608668646_bc3d79cacb_b-1-120x90.jpg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/9608668646_bc3d79cacb_b-1-768x577.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/9608668646_bc3d79cacb_b-1.jpg 1023w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Photo: via Flickr</figcaption></figure>



Maize production in some of the sub-Saharan African countries that&nbsp;<a href="https://reliefweb.int/report/zambia/southern-africa-regional-maize-supply-and-market-outlook-august-31-2021">dominated maize supplies</a>&nbsp;during the 2021/22 marketing year is expected to be lower this coming season. This will bring about some changes in the sub continent’s maize trade in the 2022/23 marketing year, in particular creating complications for Kenya. In the 2021/22 season, Kenya was the largest maize importer in the region.



But Kenya has a longstanding policy against genetically engineered maize. This limits the role of South Africa, the sub-continent’s biggest maize producer and exporter, in meeting Kenya’s needs.



The expected lower production comes in a season when demand for maize from countries in sub-Saharan Africa that rely heavily on imports is expected to remain strong. It’s estimated that Kenya, for example, will need to import&nbsp;<a href="https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Annual_Nairobi_Kenya_KE2022-0002.pdf">700,000 tonnes of maize for 2022/23</a>. Kenya’s maize production is expected to be marginally higher, but not enough to meet the country’s needs.



Kenya is typically one of the major maize importing countries in sub-Saharan Africa. The country’s expected 700,000 tonnes of maize imports&nbsp;<a href="https://www.igc.int/en/default.aspx">account for 21% of the region’s expected maize imports</a>&nbsp;of 3.4 million tonnes in 2021/22 season, according to data from the International Grains Council. Other typical maize importing countries include Zimbabwe, Botswana, Mozambique and Namibia.



However, in the 2021/22 marketing year, several sub-Saharan African countries such as Zambia, Tanzania, Zimbabwe (an exceptional year from the usual importing position) and South Africa&nbsp;<a href="https://reliefweb.int/report/zambia/southern-africa-regional-maize-supply-and-market-outlook-august-31-2021">had ample maize harvest</a>. This made it easy for them to meet Kenya’s import needs. Tanzania and Zambia were the leading maize suppliers to Kenya.



Tanzania, the biggest exporter in the region in the 2020/2021 season and Kenya’s traditional major maize supplier, is unlikely to play that role this season because its maize production is forecast&nbsp;<a href="https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Annual_Dar%20Es%20Salaam_Tanzania_TZ2022-0001.pdf">to fall by 16%</a>&nbsp;year-on-year to 5.9 million tonnes. This is due to drought at the start of the season, combined with armyworm infestations and reduced fertiliser usage in some regions because of prohibitively higher prices. The consequence of the fall in production and firmer domestic consumption means that the country could have less maize for export markets.



<a href="https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Annual_Dar%20Es%20Salaam_Tanzania_TZ2022-0001.pdf">Preliminary estimates</a>&nbsp;by the United States Department of Agriculture are that Tanzania’s maize exports could decline from 800,000 tonnes in the 2021/22 marketing year to 100,000 tonnes in the 2022/23 marketing year.



Such a drop would leave very little for Kenya’s maize needs, leaving Zambia and South Africa as major suppliers in the region.



Zambia’s expected maize production in the&nbsp;<a href="https://www.africa.com/zambia-when-crop-dreams-are-crushed/">current season is still tentative</a>, and it is unclear how much maize the country could have for exports. Zimbabwe, which had a&nbsp;<a href="https://theconversation.com/zimbabwe-had-a-bumper-harvest-what-went-right-and-what-needs-work-167307#:%7E:text=Zimbabwe%20has%20reported%20a%20bumper,stands%20at%202.7%20million%20tonnes.">large harvest in 2020/21 season</a>, is also in an uncertain position about its 2021/22 maize harvest and ability to export. The&nbsp;<a href="https://reliefweb.int/sites/reliefweb.int/files/resources/Zimbabwe%20-%20Key%20Message%20Update_%20Wed%2C%202022-03-30.pdf">incoming evidence</a>&nbsp;suggest that some regions in the country have suffered crop failures.



South Africa could help and has the maize production capacity to do so. Given&nbsp;<a href="https://www.namc.co.za/wp-content/uploads/2022/03/South-African-Supply-Demand-Estimates-_30-March-2022.pdf">current output projections of 14.7 million tonnes</a>, South Africa could have 3.2 million tons of maize for exports in the 2022/23 season – about 78% being yellow maize, and 22% white maize. But it plays a limited role in the Kenyan maize market.



<h2 class="wp-block-heading" id="h-the-barriers">The barriers</h2>



South Africa’s limited participation in the Kenyan maize market is arguably affected by regulations rather than just price and consumer preferences. Kenya continues to&nbsp;<a href="https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Annual_Nairobi_Kenya_KE2022-0002.pdf">maintain an import ban on genetically engineered products.</a>. This limits imports from South Africa&nbsp;<a href="https://allianceforscience.cornell.edu/blog/2021/06/south-africa-has-reaped-major-benefits-from-gm-maize-study-finds/">where over 80% of maize production is genetically engineered</a>.



There are&nbsp;<a href="https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Annual_Nairobi_Kenya_KE2022-0002.pdf">indications</a>&nbsp;that Kenya is changing its longstanding policy. Regulatory agencies have recently completed all trials for the approval of biotechnology maize. But any decision would still have to be approved by Kenya’s cabinet.



Even if Kenya were to adjust its policy, South Africa would not necessarily be the only maize supplier looking at expanding its market share in the country. The likes of the US and Brazil would also be at Kenya’s doorstep. The advantage of South Africa would be its substantial white maize production, which is the preferred staple grain of Kenyan consumers.



Outside the African continent, Mexico, the US and Argentina could be among the potential maize suppliers, as there are generally&nbsp;<a href="https://repository.cimmyt.org/xmlui/bitstream/handle/10883/755/66084.pdf?sequence=1">few white maize producing countries in the world</a>.



<h2 class="wp-block-heading" id="h-imbalances">Imbalances</h2>



The sub-Saharan Africa maize trade generally has some imbalances. South Africa, Tanzania and Zambia are the major maize producers and exporters in the region. For their part Kenya, Zimbabwe, Botswana, and Mozambique are often the importers.



At the regional level, sub-Saharan Africa’s aggregate maize imports amount to an average of 3.4 million tonnes a year, according to&nbsp;<a href="https://www.igc.int/en/default.aspx">data from the International Grains Council</a>. This is both white and yellow maize, with most being white maize for human consumption.



Although intra-regional trade accounts for most of the consumption needs of import-reliant countries in the region, this is also supplemented by imports from countries outside of the continent such as Argentina, Canada and Mexico.



Overall, these maize market dynamics are worth monitoring, specifically from South Africa’s perspective, as they signal that the sub-Saharan maize demand in the 2022/23 marketing year could be much larger than the previous season. This could be the case especially if <a href="https://www.africa.com/zambia-when-crop-dreams-are-crushed/">Zambia’s maize production</a> comes out lower than the 2021/22 season, which is likely if we use the <a href="https://www.namc.co.za/wp-content/uploads/2022/03/South-African-Supply-Demand-Estimates-_30-March-2022.pdf">South African maize production conditions</a> as a barometer for the region. Such a potential increase in the region’s maize imports would have implication for prices.



*Wandile Sihlobo is a South African agricultural economist and author of <a href="https://www.amazon.com/Finding-Common-Ground-Equity-Agriculture-ebook/dp/B084G1XS88">Finding Common Ground: Land, Equity and Agriculture</a>. Twitter: <a href="https://twitter.com/WandileSihlobo">@WandileSihlobo</a>

9608668646_bc3d79cacb_b-1

Changes in sub-Saharan maize trade spell potential trouble for Kenya

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-948476690-820x547.jpg" alt="" class="wp-image-418969" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-948476690-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-948476690-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-948476690-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-948476690-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-948476690-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-948476690-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>rAn employee handles wheat grain at the Kaap Agri Ltd. grain silo in Malmesbury, South Africa, on Tuesday, April 17, 2018. The World Bank said last week that it sees South Africa&#8217;s economy growing 1.4 percent this year, up from 1.1 percent estimated in January. Photographer: Dwayne Senior/Bloomberg via Getty Images</figcaption></figure>



This past week South Africa&#8217;s Crop Estimate Committee released its monthly update of the size of the 2021/22 summer crop harvest and its initial area plantings for 2022/23 winter crops. For summer crops – maize, soybeans, sunflower seed, sorghum and dry beans- this data comes when farmers have completed harvest in the country&#8217;s eastern regions.



The focus has shifted to the central and western areas where activity is underway. In all these regions, the message we receive from farmers is of a relatively large harvest, which is commendable if one thinks back to the start of the season when there were excessive rains that worried some about whether farmers could even manage to plant the typical area.



The winter crops planting – wheat, barley and canola &#8212; are also encouraging, showing an improvement from the area planted in the 2021/22 season. Let me explain both these crop data and their implications briefly.



<h2 class="wp-block-heading" id="h-summer-crops">Summer crops</h2>



South Africa&#8217;s 2021/22 maize harvest is estimated at 14,71 million tonnes. About 7,47 million tonnes are white maize, with 7,24 million tonnes being yellow maize. Essentially, this harvest is down by 10% from the 2020/21 season crop.



Still, this is well above the 10-year average maize harvest of 12,80 million tonnes and annual domestic consumption of 11,80 million tonnes. The annual decline is caused by relatively lower plantings and fairly poor yields in some regions due to excessive rains at the start of the season that I mentioned above. On 22 July, 8,24 million tonnes of maize had already been delivered to commercial silos. The rest will be delivered in the coming weeks as the harvest progresses.



Notably, the current harvest of 14,71 million tonnes implies that South Africa will remain a net exporter of maize, which we anticipate to be just over 3,0 million tonnes in the 2022/23 marketing season (note: this marketing year corresponds with the 2021/22 production season).



Another important and most welcome development is in the soybeans industry, where the 2021/22 harvest is estimated at a record 2,15 million tonnes. This is on the back of expansion in area plantings and large yields. This large soybean harvest will help lessen South Africa&#8217;s reliance on soybean oilcake imports. On 22 July, 2,09 million tonnes had already been delivered to commercial silos.



Sunflower seed has also improved notably from the previous seasons, and the 2021/22 harvest is estimated at 922 750 tonnes, the second largest harvest on record. The expansion in area plantings and expectations of large yields underpin this optimism. The harvest is still underway in the western Free State and North West regions. For example, on 22 July 2022, about 792 050 tonnes had already been delivered to commercial silos.



<h2 class="wp-block-heading">Winter grains</h2>



South Africa&#8217;s 2022/23 winter crop season started in May, and the plantings have progressed well. For example, wheat plantings are estimated at 553 900 hectares, up 6% y/y, barley plantings are estimated at 106 600 hectares, up 13% y/y, and canola planting are at 121 200 hectares, up 21% y/y. In the case of wheat, the one winter crop planted broadly beyond the Western Cape, a dominant province for winter crops, the expansion in plantings is also in the Free State, Northern Cape, Eastern Cape, North West and Limpopo. This broad expansion is unsurprising following the current attractive higher wheat prices.



Still, these are early days in the season for one to know where the harvest could be this year. In the previous 2021/22 season, we had the largest wheat harvest in two decades. There are hopes for yet another good harvest this season, especially as the soil moisture has generally improved in most regions of the country following the heavy summer rains. Still, we will all take guidance about the actual harvest when the Crop Estimates Committee releases its revised area planted estimate. The first production forecast for winter cereals for 2022 will be released on 30 August 2022.



<h2 class="wp-block-heading">Implications</h2>



These data paint a positive picture of South Africa&#8217;s grains production. The winter grains still have a long way until we have a reliable estimate of the size of the harvest and its implications of it on prices.



In the case of summer grains, the current production data will have minimal impact on prices. Global events mainly influence the domestic grains and oilseeds prices. The Russia-Ukraine war worries and concerns about 2022/23 global production following reports of heatwave and drought in the Northern Hemisphere continue to present upside support on prices, which are ultimately reflected in the South African grains market.



Still, the fact that domestic grains and oilseeds supplies are at somewhat higher levels provides comfort regarding the domestic needs and even exports to our traditional markets.



Ultimately, the relatively higher grains and oilseeds prices bode well for farmers in areas that didn&#8217;t experience much crop damage at the start of the season. Meanwhile, the consumers, livestock, dairy, sheep, goats and poultry producers will likely experience increased costs over the foreseeable future.



*Wandile Sihlobo is a South African agricultural economist and author of <a href="https://www.amazon.com/Finding-Common-Ground-Equity-Agriculture-ebook/dp/B084G1XS88">Finding Common Ground: Land, Equity and Agriculture</a>. Twitter: <a href="https://twitter.com/WandileSihlobo">@WandileSihlobo</a>

Grain And Corn Storage At Kaap Agri Ltd. Silos

Positive outlook for South Africa’s grains and oilseeds in 2021/22 season

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="545" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Super-Block-Outside-Photos-1-820x545.jpg" alt="" class="wp-image-418949" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Super-Block-Outside-Photos-1-820x545.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Super-Block-Outside-Photos-1-300x199.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Super-Block-Outside-Photos-1-136x90.jpg 136w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Super-Block-Outside-Photos-1-768x510.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Super-Block-Outside-Photos-1-1536x1020.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Super-Block-Outside-Photos-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



<h2 class="wp-block-heading" id="h-the-gauteng-industrial-development-zone-gidz">THE GAUTENG INDUSTRIAL DEVELOPMENT ZONE (GIDZ)</h2>



The Gauteng IDZ Development SOC Ltd (GIDZ) was established to develop and operate the Special Economic Zone (SEZ) program at OR Tambo International Airport. In support of its mandate, the GIDZ must facilitate the establishment of manufacturing investment operations at the SEZ. It is required to oversee the development of strategic economic infrastructure necessary for the operations of secured investment. There are presently three SEZ designated land parcels that the GIDZ is responsible for developing. All the land parcels are located at or in proximity to OR Tambo International. They are the ORTIA Precinct 1, ORTIA Precinct 2, and the Springs Precinct.



<h2 class="wp-block-heading">INDUSTRIES OF FOCUS</h2>



Each of the presently designated SEZ land parcels have particular industries of focus identified with the support of detailed studies that defined products that are suitable for localisation at each precinct. In lieu of their competitive location next to OR Tambo International, ORTIA Precincts 1 and 2 promote the production of high-value, low-mass industries whose products typically utilise airfreight as a mode of transport. These include, inter alia, fresh food agro-products, medical and pharmaceutical products, electronics, jewellery and diamonds. The Springs Precinct, due to its competitive location next to a Platinum Group Metals (PGM) refinery, is positioned for the production of PGM products such as fuel cells. It has also been identified for capital, component, and mining equipment production.



<h2 class="wp-block-heading">THE VALUE PROPOSITION</h2>



Located on the doorstep of Africa’s largest airport, the value proposition of the OR Tambo SEZ is centred around the service offering of OR Tambo International Airport. Serving as a gateway to southern Africa, the airport has the capacity to handle more than 21 million passengers per annum. The airport also has the largest air cargo hub in Africa, an advantage in the post-Covid era where air cargo has increased. The OR Tambo SEZ remains a competitive location for investors looking to manufacture and export. Confirmed as one of South Africa’s designated SEZs, the OR Tambo SEZ locations are able to provide investors access to SEZ incentives packaged at national government level. These include duty free importation of production related material or assets, VAT exemption, and employment tax incentives. Lastly, the OR Tambo SEZ forms part of the OR Tambo International Airport Aerotropolis Development Master Plan. Managed through the City of Ekurhuleni, the Aerotropolis is a 1 975km² urban development plan with the airport at its heart. The goal of the plan is to facilitate the creation of economic hubs – catering for manufacturing industries.



<h2 class="wp-block-heading">DESIRED IMPACT</h2>



As part of its SEZ programme, the growth of Small Medium Enterprises is encouraged. Developed with consideration of the national Integrated Small Enterprise Development Strategy, it provides a framework through which SMME access to economic opportunities will be undertaken by the GIDZ, ensuring that the SEZ program plays a meaningful role in the growth of SMMEs.



<h2 class="wp-block-heading">STATUS</h2>



Part of ORTIA Precinct 1 has been operational since April 2019, when a food factory was successfully commissioned, creating over 2 000 operational jobs and 265 construction jobs. Development of the remaining part of this Precinct will be home to a jewellery and diamond manufacturing cluster that is underway and targeted for completion by January 2023. Construction of the Super Block, the administrative building housing the Department of Mineral Resources and Energy (DMRE) agencies has been completed, with a 7 200 sq.m building home to the DMRE agencies since September 2021. A gold refinery building that supports a viable mineral beneficiation cluster at the Precinct was also successfully completed in 2021. Plans are already underway to develop ORTIA Precinct 2 and the Springs Precinct. Construction on the Precincts is likely to begin in the latter part of the 2022/2023 fiscal year.

Super-Block-Outside-Photos-1

Contributing To Industrial Development In The Eastern Corridor Of Gauteng: The OR Tambo International Airport SEZ

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="600" height="800" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/lord-marland-600x800.jpeg" alt="" class="wp-image-418801" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/lord-marland-600x800.jpeg 600w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/lord-marland-225x300.jpeg 225w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/lord-marland-68x90.jpeg 68w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/lord-marland-768x1024.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/lord-marland-1152x1536.jpeg 1152w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/lord-marland-scaled.jpeg 1536w" sizes="auto, (max-width: 600px) 100vw, 600px" /><figcaption>Lord Jonathan Marland of Odstock, Chairman of the Commonwealth Enterprise and Investment Council</figcaption></figure>



Rather than winning medals every four years, countries could win every year with boosted Commonwealth trade says Lord Jonathan Marland of Odstock, Chairman of the Commonwealth Enterprise and Investment Council



Today, over 5000 competitors from nations as far afield as Malaysia to Jamaica converge on Birmingham for the Commonwealth Games. Challengers will look to make history in an event that previously saw Tanzania’s Filbert Bayi break a 1500m record in 1974 that still stands today, launched the career of a 7-time gold medallist weightlifter who would later go on to become President of Nauru, and introduced the world to a then 15-year-old human dolphin called Ian Thorpe.



The Games is perhaps the most visible aspect of the Commonwealth for many of our 2.5 billion citizens. Less visible, and appreciated, is the potential of the Commonwealth to bolster trade, business and investment between our 56 members. Given free enterprise and free trade provides the best collective means for shared prosperity, it should be better leveraged to deliver them.



Though our family of nations is diverse,&nbsp;common threads connect us in a way that lubricate&nbsp;trade and investment. This is the Commonwealth Advantage:&nbsp;the shared English language that allows for easy and effective communication; the familiar legal and administrative systems, rooted in common history, that makes one another’s business environments easily navigable; and the lively diaspora networks that pulls companies and commerce tighter together around the world.



Such conveniences bring a discount: trade between members is on average 21% cheaper,&nbsp;part of the reason&nbsp;they trade 20% more with one another than the rest of the world. With the addition just last month of its two newest members, Gabon and Togo, African countries make up the largest contingent of the Commonwealth. All will be seeking to make their mark at the Games this week in Birmingham.&nbsp;But rather than win every four years at the Games, they could win every year through the Commonwealth advantage.



The figures take on further significance when considering where our unique association of states is headed. The&nbsp;Commonwealth’s total GDP is forecast to rise nearly 50 per cent to $19.5 trillion within 5 years. Member States host over half of the global emerging cities, from the buzzing entrepreneurial Nairobi to next-generation tech innovator Bangalore.&nbsp;And whilst natural resources are spread throughout the Commonwealth, more significant are the vast reserves of talent and dynamism that come courtesy of 60% of our population being under the age of 30. These are the growth markets of the future global economy.



Now we must ask how we strengthen the Commonwealth Advantage. Of course, there is more that we can do to lower tariffs and other artificial constraints on trade between our countries, ensuring it remains fair but also freer. Respective memberships of regional trading blocs or customs unions do not – as some argue – hold us back: barriers can be lowered whilst remaining compliant within various groupings. In most cases, one has no bearing on the other. Even where it might, there is no Commonwealth imposition of conditions upon members that force a choice. Instead, we can work in an ad hoc way to enrich trade through trust.



In fact, the informality of our voluntary association is the source of its strength.&nbsp;Unencumbered by a weighty bureaucracy, we are free to explore a breadth of possibility. Given so many of our members lead the world in technological innovation, such expertise should be brought to bear to overcome technical trade barriers – whether, for instance, digitising costly and inefficient paperwork at customs, or utilising blockchain to minimise checks at borders.&nbsp;Supportive trading infrastructure – both digital and physical – should go hand in hand with the lowering of barriers.



We must also work collectively to overcome perceived investment risks within some of our developing countries. Though the Commonwealth makes up a quarter of global FDI, there is still vast pools of capital on which our members could and should draw – but the proposition must be right. Bastions of global finance, like London and Singapore, could work together further with member states to ensure risks are minimised and investments are secured. Such processes would also be streamlined because we share similar legislative frameworks.



Indeed, it is developing countries that stand to gain the most through our association, where often the benefits of other trade organisations accrue to the largest. Not forcing a straitjacket onto members unfit for their circumstances, whilst focusing on the private sector rather than specific regulations, allows members to pick the path best suited to the composition of their market economy and its stage of development.



However, many members, such as Sri Lanka, are falling into debt stressed situations, likely to worsen as rising interest rates, the strengthening dollar and spiralling bond yields raise the costs of servicing. The need to expand tax bases in developing countries, with most employment in the informal economy, is taking on a new urgency. Only the private sector, one that can be bolstered through the Commonwealth network, can provide the tax revenues, both from the companies and the employment they create, and help states prosper in the globalised economy.



Though great strides have been taken, comparative to our population, human and natural resources, the Commonwealth remains a slumbering giant. With these further steps, and even the simple knowledge within the Commonwealth on how to better leverage our ties, we all stand to gain more.



Like the games, trade and enterprise should be rooted in fair play. But it is in competition against one another that we reach higher. Let the games, and the business, begin.

lord-marland

Today, the Commonwealth Games starts – let the business begin

For many in South Africa, the term ‘labour broker’ often recalls negative thoughts. The practice of labour broking has a chequered past which has left a bad aftertaste for most. However, much of the opposition to the practice of labour broking comes from misunderstanding as to what it really entails. The practice has evolved from providing casual unskilled and semi-skilled labour on an exploitative basis into a fully-fledged service offering that provides temporary placement opportunities for skilled workers, along with many of the benefits of employment. Now a highly regulated industry, many reputable Temporary Employment Services (TES) providers have found their niche in supplying skilled workers on a temporary basis, particularly where such skills are sought-after or hard to find. An example of this is the placement of skilled workers, such as healthcare professionals in hospitals and clinics to meet their fluctuating demands.



Rooted in misunderstanding



Generally, there is the mistaken perception that the only way for workers to achieve job security is through permanent employment. There is also a misbelief that the point of the temporary employment sector is to keep people out of permanent jobs and prevent them from achieving job security. This is not the case. In the healthcare TES space particularly, most nurses seeking temporary placements are already permanently employed. Here, nursing professionals are using TES placements to take advantage of the skills shortage to pick up additional shifts to supplement their income and address their rising costs of living. In addition, they are ensuring hospitals have the necessary staff at short notice to ensure patient care is maintained.



Balancing cost and quality



Healthcare institutions also need to address the rising costs of providing medical care without compromising on quality of care, and one of the most effective ways to do that is to achieve flexibility through a TES provider. Given the environment in which they operate, there is no predictability and there is no fixed permanent formula when it comes to ensuring the correct number of nurses are on duty at any given time, to avoid being over-staffed (wasted costs) or under-staffed (compromised quality of care).



Having a labour model that is quickly adjustable is the only viable way to handle staff facilities according to the demand. Consequently, hospitals now work on a model of permanent staff, and flexible, outsourced staff. This helps hospitals to fill the gaps due to fluctuating demands, absenteeism, or annual leave. It also gives permanent staff the opportunity to take sick or family responsibility leave, knowing that their shift will be adequately covered. This helps healthcare workers to avoid burnout and gives them the flexibility to tend to their family needs.



Finding common ground



Another misconception about TES providers is that they work against labour unions. Perhaps this is because temporary placements do not fit in with their business model of a monthly union membership fee associated with permanent employment. Regardless, it is worth pointing out that when it comes to helping healthcare professionals avoid unemployment and giving them an opportunity to fairly earn a living, TES providers and unions should be on the same page.



Healthcare TES providers welcome engagement with unions. In fact, there are tangible benefits for workers in doing so. There is a unique offering in this industry called a ministerial determination. This gives amnesty to employers by allowing the workers to choose whether the TES provider adds the annual leave provision Rand amount to the worker’s salary or the TES provider makes provision for the leave to accumulate for when the worker takes leave. The ministerial determination allows the worker flexibility of choice in making provision for annual leave which is part of the basic conditions of employment, and this is done through consultation with unions who provide their sign-off before it goes to the Department of Labour. Workers take annual leave through their primary employer, and therefore have the benefit that when they take leave, they are compensated.



Choosing freedom and flexibility



Along with this industry-unique benefit, many healthcare professionals choose TES as a career path, because it gives them flexibility. Not everyone is as concerned with job security, some prefer to prioritise their home or family life, and TES placements give them the ability to work when and where they choose. They also get the freedom of gaining experience in other hospitals, in other facets of the medical field, which helps prevent boredom and complacency and adds to their skill sets. With the current skills shortage in the medical sector in South Africa, specialist TES providers can only continue to play a critical role in covering the gaps, ensuring continued quality of care for healthcare institutions and flexible earning opportunities for healthcare workers.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="708" height="629" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Donald-Mcmillan.jpeg" alt="" class="wp-image-418726" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Donald-Mcmillan.jpeg 708w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Donald-Mcmillan-300x267.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Donald-Mcmillan-101x90.jpeg 101w" sizes="auto, (max-width: 708px) 100vw, 708px" /><figcaption>Donald McMillan, MD at Allmed Healthcare Professionals</figcaption></figure>

Donald-Mcmillan

Opinion Piece: Debunking myths about labour broking in South Africa’s healthcare sector

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="769" height="800" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/professor-tshilidzi-marwala-1476x1536-1-769x800.jpg" alt="" class="wp-image-418717" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/professor-tshilidzi-marwala-1476x1536-1-769x800.jpg 769w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/professor-tshilidzi-marwala-1476x1536-1-288x300.jpg 288w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/professor-tshilidzi-marwala-1476x1536-1-86x90.jpg 86w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/professor-tshilidzi-marwala-1476x1536-1-768x799.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/professor-tshilidzi-marwala-1476x1536-1.jpg 1476w" sizes="auto, (max-width: 769px) 100vw, 769px" /><figcaption>Professor Tshilidzi Marwala, University of Johannesburg Vice Chancellor</figcaption></figure>



The United Nations Educational, Scientific and Cultural Organization has appointed University of Johannesburg Vice Chancellor Professor Tshilidzi Marwala the new rector of the United Nations University in Tokyo, Japan.



Professor Marwala will be the university’s seventh rector and will take up his new post from next March. He succeeds Canada’s Professor David M. Malone who has headed the university for the past nine years.



The United Nations University is a global think tank of 13 institutes in 12 countries. It supports efforts to resolve global human development challenges working closely with other United Nations system organizations and leading research institutions.



An academic for most of his working life, Professor Marwala was the Deputy Vice-Chancellor for Research and Internationalization at UJ till 2017 and Executive Dean of the Faculty of Engineering and the Built Environment before then.



&#8220;Professor Marwala is an accomplished scholar and thought leader with multi-disciplinary research interests that include the theory and application of artificial intelligence to engineering, computer science, finance, social science and medicine,’’ the United Nations said in a statement. &#8220;He has an extensive track record in human capacity development and is committed to leveraging technology and global connectedness towards the pursuit of the Sustainable Development Goals.’’



He has been a visiting scholar at Harvard University, University of California at Berkeley, Wolfson College of the University of Cambridge and Nanjing Tech University. He has also previously served as a member of the International Consultative Council at the Silesian University of Technology in Poland and is a trustee of the Nelson Mandela Foundation.



Professor Marwala holds a doctorate specializing in Artificial Intelligence and Engineering from the University of Cambridge, a Master of Mechanical Engineering from the University of Pretoria and a Bachelor of Science in Mechanical Engineering from Case Western Reserve University.



His work is internationally recognized and among other things he is a fellow of The World Academy of Sciences, the Academy of Science of South Africa, the African Academy of Sciences and the South African Academy of Engineering.

professor-tshilidzi-marwala-1476×1536-1

UNESCO appoints South Africa’s Marwala UN University Rector in Japan

We are in the toughest period the world economy has faced since the creation of the multilateral system more than three-quarters of a century ago. A quadruple shock of COVID, climate change, conflict and cost-of-living has undone years of hard-fought development gains. As financial conditions tighten, even countries that had seemed on track to prosperity and stability now stare into the abyss of debt distress, fragility and uncertainty about the future.



Coordinated, multilateral action is necessary to tackle the crises we face. Both aid and trade have key roles to play in reversing the impacts of this quadruple shock and putting the world back on track to achieve the Sustainable Development Goals.



We head the three international agencies that comprise the Geneva trade hub – the World Trade Organization (WTO), UN Conference on Trade and Development (UNCTAD) and the International Trade Centre (ITC). The WTO makes and monitors the rules for global trade. UNCTAD delivers research and consensus-building to guide governments. ITC helps small business go global, especially firms led by women and young entrepreneurs. We work together so that trade works better for development.



All three of us share a deep commitment to trade-led prosperity. All three of us understand that a world in crisis means no more business as usual. And all three of us want our organizations to “walk the talk” on making aid and trade deliver for real people.



To guide aid and trade towards a better world, policymakers need to pivot in three fundamental ways.



First, make trade greener. Global trade can play an important role in a transition to a low-carbon economy. Preliminary research at the WTO suggests that removing tariffs and regulatory trade barriers for a set of energy-related environmental goods would reduce global CO2 emissions by 0.6% in 2030 just from improved energy efficiency, with additional potential gains from innovation spillovers and as lower prices accelerate the shift towards renewable energy and less carbon-intensive products.



Second, make trade more inclusive. Promoting greater trade by small businesses and greater participation by women and youth make companies and countries more competitive, drives economic transformation and reduces poverty. Yet ITC business surveys found that one only out of every five exporting companies is women-led. WTO data show that micro, small and medium-sized firms represent around 95 percent of all companies globally but only one-third of total exports.



Third, make trade more connected. In our networked world, the future of trade is through digital channels and platforms, especially for small businesses. During the pandemic, we saw how doing business online went from being useful to critical for survival. UNCTAD data shows that digitally delivered services reached almost two-thirds the level of global services exports.



These themes will be discussed at the upcoming Global Review of Aid-for-Trade, which will be held from 27-29th July in Geneva.



The event comes one month after the WTO&#8217;s successful Twelfth Ministerial Conference, which put trade multilateralism back on track and delivered a landmark agreement on fisheries subsidies, and two months before the COP27 meeting in Egypt that could determine the world’s chances to keep the 1.5C target alive.



The data shows promising signs that aid-for-trade is &nbsp;tilting towards greater sustainability, inclusivity and connectivity. OECD and WTO data reveal a record high of nearly US$50 billion in aid for trade disbursements in 2020, of which half were either climate or gender related, and one-third supported the digital economy. Despite growing budgetary pressures at home, it is critically important to continue and increase these aid for trade flows.



Apart from a stronger thematic focus on sustainability, inclusivity and connectivity, maximizing the contribution of aid for trade to achieving the Sustainable Development Goals requires a resolute focus on the “where” and “how” of delivering development results.



This means a focus on those countries whose trade and development needs are highest – particularly Least Developed Countries and fragile/conflict-affected countries – and regional initiatives like African Continental Free Trade Area, to ensure they become stepping-stones to wider and more inclusive regional value chains and trade-led growth.



It means partnership across international organizations. The WTO, UNCTAD, and ITC already collaborate on initiatives like the Global Trade Helpdesk, which simplifies market research by bringing key trade and business information into a single portal, as well as on support to cotton-exporting countries in Africa.



Last but certainly not least, it means mobilizing public and private finance. The IFC estimates a worldwide US$300 billion financing gap for women, and the global trade finance gap has nearly doubled from an already-staggering $1.5 trillion. Without access to finance, firms cannot grow, diversify or formalize.



We want to end with a call to action. Creating a more sustainable, inclusive and connected future is the moon shot of our times. Aid, trade and multilateralism – working together – are part of the solution. It is normal and understandable that governments act to shore up their own economies in troubled times. But we must act now to ensure that the world’s poorest and most vulnerable can still see a pathway to prosperity through global trade.



The following is a joint opinion piece by WTO Director-General Ngozi Okonjo-Iweala, UN Conference on Trade and Development Secretary-General Rebeca Grynspan, and International Trade Centre Executive Director Pamela Coke-Hamilton



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="788" src="https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Okonjo-Iweala-820x788.jpg" alt="" class="wp-image-369148" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Okonjo-Iweala-820x788.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Okonjo-Iweala-300x288.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Okonjo-Iweala-768x738.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Okonjo-Iweala-1065x1024.jpg 1065w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Okonjo-Iweala-696x669.jpg 696w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Okonjo-Iweala-1068x1027.jpg 1068w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Okonjo-Iweala.jpg 1295w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Ngozi Okonjo-Iweala, WTO Director-General</figcaption></figure>



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="800" height="533" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Secretaria_General_Iberoamericana_Rebeca_Grynspan_2021.jpg" alt="" class="wp-image-418697" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Secretaria_General_Iberoamericana_Rebeca_Grynspan_2021.jpg 800w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Secretaria_General_Iberoamericana_Rebeca_Grynspan_2021-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Secretaria_General_Iberoamericana_Rebeca_Grynspan_2021-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Secretaria_General_Iberoamericana_Rebeca_Grynspan_2021-768x512.jpg 768w" sizes="auto, (max-width: 800px) 100vw, 800px" /><figcaption>Rebeca Grynspan, UN Conference on Trade and Development Secretary-General</figcaption></figure>



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="800" height="533" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Pamela_Coke-Hamilton_48721844818.jpg" alt="" class="wp-image-418699" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Pamela_Coke-Hamilton_48721844818.jpg 800w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Pamela_Coke-Hamilton_48721844818-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Pamela_Coke-Hamilton_48721844818-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Pamela_Coke-Hamilton_48721844818-768x512.jpg 768w" sizes="auto, (max-width: 800px) 100vw, 800px" /><figcaption>Pamela Coke-Hamilton, International Trade Centre Executive Director</figcaption></figure>

Okonjo-Iweala

A World in Crisis Needs Both Trade and Aid

18 July 2022:&nbsp;The consecutive large increases in the fuel price over the past number of months have left consumers reeling, largely due to the impact such increases have on the cost of most other consumables.&nbsp;&nbsp;However, it’s not just consumers that are feeling the effects of sharply higher fuel prices.



Trade and industry in South Africa, and globally, is just as vulnerable to energy shocks. However, the effect of increasing fuel costs on trade flows is a lot more difficult to quantify than it is at a consumer level. That’s because fuel is just one of many input costs that importers and exporters have to take into account in order to ensure the profitability and sustainability of their businesses. So, while there are those who argue that oil price spikes like we’ve seen recently have the ability to put the brakes on global trade, the reality is that it’s just not that simple.



While high fuel prices will certainly have some direct influence on trade volumes – particularly trade activities undertaken over vast distances – that direct influence is relatively minor compared to the indirect, knock-on effects of high oil prices and the resulting inflationary pressures on both the supply and demand side of the trade equation.



For one, it’s very important, when considering the impact of ongoing fuel increases on trade, to look beyond just the activities of importing or exporting goods. Both of these trade activities are ultimately dependent on extensive supply chains, most of which begin way before the trade activity itself, with extraction, harvesting or manufacturing activities. The negative effect of high fuel costs is typically felt at every point along these supply chains, and it has a tendency to compound as the number of ‘links’ in the chain increases.



In addition to the supply side, there is also the consumption side of the trade equation to consider, and here too, economic impacts can have a knock-on effect that is far greater than just the cost of fuelling a ship or truck. One of the most significant indirect impacts of significant fuel price increases is demand destruction.



This is effectively the level of inflation at which consumer behaviour changes and becomes notably more conservative. Fuel cost is arguably the most significant direct driver of inflation, whether up or down. And when that influence is upwards, the impacts filter through much of the economy. Not only do higher prices at the pump mean consumers have less money to spend, but they also increase the costs of manufacturing and transporting goods; and these costs are invariably passed on to the people who buy them.



While the world may not yet have reached the tipping point at which significant demand destruction takes place, if inflation continues to rise it will likely happen very soon. At that point the indirect impact of rising fuel prices on trade volumes will almost certainly be seen as supply is forced to drop to match declining demand.



The consequences of such demand destruction could be dire. For South Africa, as a developing economy, most production, distribution and trade businesses are already unable to pass through further increases in costs. And most retailers will soon reach the point where they are not prepared to accept more pass-through costs.



So, the only alternative is for businesses to absorb them. And the only effective way of doing that is by reducing operating costs in order to maintain margins. In most cases, the first place owners and boards look to cut costs is by reducing staff headcount. Unfortunately, lay-offs and retrenchments are only a short-term fix, and they have the further indirect impact of reducing consumption, further stifling economic growth, and ultimately reducing production and trade volumes even further.



There’s also a very fine line to be walked here by companies, as reducing employee numbers invariably leads to demands for higher pay from those who remain. And when you add that to the already rising costs of labour due to inflation-linked increases, the benefit of reducing operating costs through retrenchments can quickly be eroded.&nbsp;



With all this in mind, it’s something of a stretch to say that trade volumes are at the mercy of increasing oil prices. The reality is that we are facing the potential for declining global trade; but there’s far more behind it than just the higher cost of filling up a cargo ship. And the difficult truth is that, unless a way is found to stabilise fuel prices soon, the negative impact they will have on entire economies and the world’s consumers will massively overshadow those they will exert on global trade volumes.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="543" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Bobby-Madhav_FNB1-820x543.jpg" alt="" class="wp-image-418521" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Bobby-Madhav_FNB1-820x543.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Bobby-Madhav_FNB1-300x199.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Bobby-Madhav_FNB1-136x90.jpg 136w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Bobby-Madhav_FNB1-768x509.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/Bobby-Madhav_FNB1.jpg 1267w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Bobby Madhav, FNB Head of Trade &amp; Structured Trade and Commodity Finance</figcaption></figure>

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