Category Archives: Market

East African Flower Industry Wilts as Sales to Europe Dry Up

Among its many other effects, the coronavirus pandemic has cut deeply into flower sales. This is being felt in the Netherlands, the center of the global horticulture industry, and in East African flower exporting countries like Kenya and Ethiopia, where tens of thousands of jobs are increasingly in danger. 

Aalsmeer, just outside of Amsterdam, is home to the world’s busiest flower auction, where thousands of flowers are purchased each day and shipped all over the world.

But since the coronavirus pandemic began, flower sales have dropped by 50 percent, says Michel van Schie of the Royal Flora Holland company. 

“This is also the period with the most important days for the flower industry like Valentine’s Day, International Women’s Day, Mother’s Day,” van Schie said. “The crisis which we are now facing couldn’t have come at a worse moment than this. Not only there were a lot of unsold flowers, but the flowers that were sold were also sold for very low prices.”

That is bad news for Africa’s leading flower-growing countries, Kenya and Ethiopia.

Flower exports add about $1 billion annually to the Kenyan economy. But with demand falling sharply, Kenyan exports have dropped by about two-thirds in recent weeks, costing the industry and the country millions in revenue.

Hosea Machuki, CEO of the Fresh Produce Exporters Association of Kenya, says the situation is critical.

“And we just hope that when it’s all done, that the industries and the companies that are involved in the horticulture industry will be able to spring back to life, or at least continue their business and to keep their employees,” Machuki said. “We have about 350,000 Kenyans directly employed and at the moment about 200,000, they’re likely to lose their jobs on account of loss of business.”

Neighboring Ethiopia is the second-largest African flower exporter, and the horticulture sector is the country’s fourth-largest in export earnings. But because of COVID-19, Ethiopia is exporting only about 20 percent of its usual volume.

Frank Ammerlaan, a Dutch flower farmer in Ethiopia, says he noticed the effects immediately once Europe was hit with the coronavirus. 

“Majority of our sales stop suddenly. And that’s because of shops in Europe being closed, borders being closed and logistics to give priority for food items and other essential items. So it was a big shock for us,” he said.

Ammerlaan employs about 1,000 people and usually exports two million stems a week to the Dutch flower auction, but business has dropped by 30 to 40 percent.

To prevent the Ethiopian flower industry from collapsing and to keep foreign exchange flowing into the country, the government has designated the sector as essential – meaning its companies and its estimated 150,000 workers can keep operating despite the state of emergency measures.  

Source: Voice of America

‘Complete Collapse of Economies’ Ahead as Africa Faces Virus

Some of Uganda’s poorest people used to work here, on the streets of Kampala, as fruit sellers sitting on the pavement or as peddlers of everything from handkerchiefs to roasted peanuts.

Now they’re gone and no one knows when they will return, victims of a global economic crisis linked to the coronavirus that could wipe out jobs for millions across the African continent, many who live hand-to-mouth with zero savings.

“We’ve been through a lot on the continent. Ebola, yes, African governments took a hit, but we have not seen anything like this before,” Ahunna Eziakonwa, the United Nations Development Program regional director for Africa, told The Associated Press. “The African labor market is driven by imports and exports and with the lockdown everywhere in the world, it means basically that the economy is frozen in place.

“And with that, of course, all the jobs are gone.”

More than half of Africa’s 54 countries have imposed lockdowns, curfews, travel bans or other measures in a bid to prevent local transmission of the virus. They range from South Africa, where inequality and crime plague Africa’s most developed country, to places like Uganda, where the informal sector accounts for more than 50% of the country’s gross domestic product.

The deserted streets in downtown Kampala, Uganda’s capital, underscore the challenge facing authorities across the world’s poorest continent, home to 1.3 billion people: how to look after millions of people stuck at home for weeks or even months of lockdown.

With some governments saying they’re unable to offer direct support, the fate of Africa’s large informal sector could be a powerful example of what experts predict will be unprecedented damage to economies in the developing world. Among the millions made jobless are casual laborers, petty traders, street vendors, mechanics, taxi operators and conductors, housekeepers and waitresses, and dealers in everything from used clothes to construction hardware.

Unless the virus’ spread can be controlled, up to 50% of all projected job growth in Africa will be lost as aviation, services, exports, mining, agriculture and the informal sector all take a hit, Eziakonwa said.

“We will see a complete collapse of economies and livelihoods. Livelihoods will be wiped out in a way we have never seen before,” she warned.

The U.N. Economic Commission for Africa has said the pandemic could seriously dent already stagnant growth in many countries, with oil-exporting nations like Nigeria and Angola losing up to $65 billion in revenue as prices fall.

Economies in sub-Saharan Africa are seen as especially vulnerable because many are heavily indebted and some struggle just to implement their budgets under less stressful circumstances.

Now the continent might need up to $10.6 billion in unanticipated increases in health spending, and revenue losses could lead to debt becoming unsustainable, UNECA chief Vera Songwe said in March.

Urgent calls for an economic stimulus package have followed.

Ethiopian Prime Minister Abiy Ahmed has spoken of an “existential threat” to Africa’s economies while seeking up to $150 billion from G20 nations. A meeting of African finance ministers agreed that the continent needs a stimulus package of up to $100 billion, including a waiver of up to $44 billion in interest payments.

South African President Cyril Ramaphosa backed the calls for a stimulus package, saying in a recent speech that the pandemic “will reverse the gains that many countries have made in recent years.” Several African nations have been among the fastest-growing in the world.

The International Monetary Fund on March 25 said it had received requests for emergency financing from close to 20 African countries, with requests from another 10 or more likely to follow. The IMF has since approved credit facilities for at least two West African nations — Guinea and Senegal — facing virus-related economic disruption.

Further challenges exist. Rampant corruption in many African countries feeds inequality, and poor or non-existent public services stoke public anger that sometimes escalates into street protests and deadly violence.

Measures to control the spread of COVID-19 could make that worse as people trapped at home go hungry.

UNECA has called for emergency actions to protect 30 million jobs immediately at risk across Africa, particularly in the tourism and airline sectors, saying the continent will be hit harder than others with an economic toll that will exacerbate “current fragilities.”

After Ugandan President Yoweri Museveni announced that food markets could remain open under orders to decongest crowded areas, some fruit vendors were assaulted by armed men and had goods confiscated, drawing an apology from the army commander. Museveni later announced an effective lockdown, closing public transport and all but essential businesses.

“What am I going to eat if he stops us from working? Museveni cannot do that,” said Marius Kamusiime, who operates a passenger motorcycle. “We may have to go back to the village if this corona becomes serious.”
On a continent where extended families are common, some say, one job loss can spell doom for up to a dozen or more people.

“Sitting down is not an option because they don’t have money locked away,” said Eziakonwa, the UNDP official in charge of Africa.

Some governments such as Rwanda are distributing food to those who need it, but there are questions about sustainability.

“We do know what to do to bring the economy back to life. What we don’t know is how to bring back people to life,” said Ghanaian President Nana Akufo-Addo. He has created a virus alleviation fund to look after the neediest and has donated the equivalent of his salary for three months.

But many want to see more support, including tax relief that benefits a wider section of the urban poor.

In Kenya, President Uhuru Kenyatta has announced temporary tax relief to people described as low-income earners — those earning up to $240 in monthly wages — as well a reduction in the maximum income tax rate from 30% to 25%. He also gave $94 million to “vulnerable members of our society” to protect them from economic damage.

But other leaders say they cannot afford such benefits.

Noting that “the rich countries are unlocking staggering sums” to stimulate their economies, Benin’s President Patrice Talon said that his West African country, “like most African countries, does not have these means.”

Source: Voice of America

Economists Say Coronavirus Will Slam African Economies

ADDIS ABABA – As the coronavirus spreads across Africa, countries are taking stronger measures to curb its spread. The restrictions may contain the virus, but will likely have a deep impact on the continent’s economies.

With several African governments closing borders, canceling flights and enforcing strict quarantine requirements to curb the spread of the virus, experts say there will be consequences for the continent’s economy.

The United Nations said it now estimates Africa’s GDP rate will fall from 3.2 percent to 1.8 percent this year.

“This is going to deal a very severe blow to growth,” said Vera Songwe, secretary-general of the United Nations Economic Commission for Africa, “even though the numbers of cases on the continent are quite small. If you look at that Africa does not seem to be affected. But then when you look at the economics, I think that is where the big story is for Africa. We are being severely affected.”

Over the weekend Kenya shut its border to foreigners, while Ghana banned entry to anyone who visited a country with the coronavirus in the last two weeks.

South Africa, already in a recession, declared a national state of emergency and banned travel to and from China, Europe and the U.S.

Economists say these restrictions and others around the world will disrupt global supply chains and decrease travel, which in turn should cause oil prices to drop.

Songwe said African oil exporters will feel the impact.

“If you’re a country like Nigeria, which is a net oil exporter — one, we’re demanding less oil from you, but secondly the amount of oil that we’re demanding from you has dropped [in price]. We’ve estimated that Nigeria could lose almost $19 billion if the trend continues and that’s a big shock to Nigeria’s economy, which was already growing at quite a low rate of 2.8 percent.”

In order for Africa to meet its global targets under the UN’s Sustainable Development Goals, economists say Africa must grow at a minimum of 8 percent.

Stephen Karingi, the director of the trade division at the UN’s Economic Commission for Africa, told VOA that the impact on Africa’s economy and health systems would be devastating.

“As things stand now the 3.2 percent growth has actually been insignificant when it comes to meeting these SDG goals,” he said. “That’s the point that we want to make. In other words, we are going to see an increase in the number of people who are actually poor or below the poverty line.”

The coronavirus also resulted in the cancellation of talks in Addis Ababa that were aimed at completing the African Continental Free Trade Area, which is scheduled to launch?on July 1.?

Wamkele Mene, the secretary-general of the free-trade bloc, told VOA that without the talks, the deadline will be hard to meet.

“We will have to find a way to expedite the work,” he said. “To give you an example in 2018, we worked for 26 days nonstop from nine in the morning?until 2 or 3 am, 25 to 26 days nonstop to meet the deadlines of?March 21, the signature of the agreement. So we will have to find a way and do something similar to expedite the work.”

For the moment, most African government are focused on simply containing the coronavirus.

South African Finance Minister Tito Mboweni said Monday the government would need to set aside additional funding to deal with the crisis. More than 50 cases have been identified in South Africa to date, while both Ethiopian and Cameroon on Monday confirmed their fifth case respectively.

Source: Voice of America

China’s Exports Slump as Anti-virus Controls Close Factories

BEIJING – China’s exports fell by double digits in January and February as anti-virus controls closed factories, while imports sank by a smaller margin.

Exports tumbled 17.2% from a year earlier to $292.4 billion, a sharp reverse from December’s 7.8% rise, customs data showed Saturday. Imports declined 4% to $299.5 billion, down from the previous month’s 16.3% gain.

Trade was poised for a boost after Beijing and Washington removed punitive tariffs on some of each other’s goods in a trade truce signed in January. But that was offset by Chinese anti-virus controls that shut down much of the world’s second-largest economy in late January.

Exports to the United States plunged 27.7% in January and February to $43 billion, worsening from December’s 12.5% decline. Imports of American goods crept up 2.5% to $17.6 billion, but China still recorded a $25.4 billion trade surplus with the United States.

China’s global trade balance fell to a $7.1 billion deficit for the first two months of the year.

Factories reopen slowly

Manufacturers that make the world’s smartphones, toys and other consumer goods are reopening but say the pace will be dictated by how quickly supply chains start functioning again. Forecasters say industries are unlikely to be back to normal production before at least April.

Until the virus outbreak, Chinese trade had been unexpectedly resilient despite Beijing’s tariff war with President Donald Trump over its technology ambitions and trade surplus. Last year’s exports rose 0.5% over 2018.

Beijing told exporters to pursue other markets in Asia, Europe and Africa after Trump slapped punitive duties on their goods starting in 2018. China retaliated by raising tariffs on American soybeans and other goods.

Some of those penalties were rolled back after the two sides signed a “Phase 1” agreement in January. Washington canceled additional planned tariff hikes and Beijing promised to buy more American farm exports.

Economists warn the truce fails to address contentious U.S.-Chinese disputes that might take years to resolve.

Source: Voice of America

Europe Struggles to Contain Coronavirus Outbreaks African Economy Hit Hard

LONDON – Parts of Northern Italy are on lockdown following an outbreak of the Coronavirus or Covid-19 as its known with at least seven deaths in the region. The sudden outbreaks in recent days from South Korea to Iran to Italy have raised fears that the virus – which originated in China – will turn into a global pandemic. Global cases of the virus have passed 80000. Meanwhile a new report warns that southeast Asian and sub-Saharan African economies could be badly hit even if there are no outbreaks of the disease there.

Northern Italy is the epicentre of Europes Coronavirus outbreak. In the regions of Lombardy and Veneto several small towns have been put on lockdown � and 50000 people have been told to stay at home. Supermarket shelves are emptying of basic goods even in big cities like Milan.

Prime Minister Giuseppe Conte urged citizens to heed government advice.

Conte said This discomfort and sacrifice which for now is intended for 14 days I hope will prove to be effective to contain the spread of the virus.

But with new cases reported in other Italian regions � and in Spain and Switzerland � health authorities are struggling to contain the virus. Virologist Doctor Sterghios Moschos of Britains University of Northumbria says it’s vital people do all they can do to stop its spread.

The containment procedure is there to effectively dampen down the intensity of transmission and stretch it out to prevent an overload in healthcare settings Moschos said.

Iran is one of the worst-affected nations outside China with hundreds of infections and more than a dozen confirmed deaths. South Korea is also badly hit and the U.S. government has advised against all non-essential travel there. In China � where the virus first appeared in late December – infections have topped 77000 with more than 2500 deaths.

The window of opportunity for stopping this disease from becoming a pandemic is narrowing very fast. We the entire (medical) community at the moment is anticipating this will eventually develop into a pandemic. However I have to point out that in the past weve had similar fears and what has happened is that viruses just died down die away Moschos said.

The global economic cost could hit $360 billion according to a report from the Overseas Development Institute or ODI which warns sub-Saharan Africa stands to lose $4 billion in export revenue. Oil and copper prices are sharply down � and big exporters to China such as Angola are suffering. The ODI says Sri Lanka Vietnam and the Philippines will be worst hit.

Sherilynn Raga is co-author of the report says Everyones looking back at the SARS impact in 2003. But of course if we look back China is now four times bigger than during the time of the SARS outbreak and its more connected to the world now through global value chains and the manufacturing sector.

Scientists are racing to produce a vaccine for the virus � with the first human trial scheduled for April. By then the Covid-19 outbreak could be a full pandemic � with serious consequences for national health systems and the global economy.

Source: Voice of America

Cyberthefts Help North Korea Offset Revenue Lost to Sanctions

North Korea made up nearly $2 billion of revenue it lost from sanctions by conducting cyberthefts from financial institutions and cryptocurrency exchanges, an expert said.

The government’s engagement in illicit cyberoperations such as thefts has been undercutting the effectiveness of sanctions, said Troy Stangarone, senior director of the Korea Economic Institute.

North Korea lost approximately $1.5 billion to $2 billion annually from 2018 to 2019 because of sanctions, said Stangarone, who estimated the figures by comparing export revenues, mostly from China, before and after major export sanctions were imposed on North Korea in 2016.

Beginning that year, the U.N. Security Council passed several resolutions banning North Korea from exporting commodities, such as coal, textiles and seafood, that became key sources of income supporting its nuclear weapons program.

According to a report released by the U.N. Panel of Experts in August 2019, North Korea generated as much as $2 billion by conducting cyberattacks on banks and cryptocurrency exchanges, offsetting the amount the regime lost from sanctions.

North Korea’s state-sponsored hackers conducted online bank and cryptocurrency heists in 17 countries, including Bangladesh, Chile, India, Poland, South Korea and South Africa, according to the U.N. report.

Communications system exploited

The hackers stole money from banks by gaining access to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system. They exploited the system to execute fraudulent transactions by transferring funds to dummy accounts set up under their control, the U.N. report said.

The report indicated that North Korea also has increasingly turned toward stealing from cryptocurrency exchanges that have less oversight and fewer regulations than the traditional banking sector. Cryptocurrency is an electronic form of money that exists only virtually in digital form as a medium of exchange to conduct financial transactions.

If sanctions are going to have the type of effects that we hope, there’s going to need to be effort made to try and cut off these illicit avenues, Stangarone said.

He said the international community has yet to put in place firm measures that would limit North Korea’s ability to exploit things like cryptocurrency.

Stangarone said that although banks have more robust systems in place to prevent theft, it doesn’t mean that they are invulnerable.

On Wednesday, a State Department spokesperson told VOA’s Korean service that it is deeply concerned about the DPRK’s malicious cyber activities, which pose a significant threat to the United States and the broader international community.

The DPRK stands for North Korea’s official name, the Democratic People’s Republic of Korea.

Quoting from the 2019 World Threat Assessment published by the Office of the Director of National Intelligence, the spokesperson said, North Korea continues to use cyber capabilities to steal from financial institutions to generate revenue.

According to a report issued by the Massachusetts-based cybersecurity firm Recorded Future’s Insikt Group last week, internet use by North Korean senior leadership to conduct cyberattacks has soared 300% since 2017.

The report, How North Korea Revolutionized the Internet as a Tool for Rogue Regimes, said the regime has grown sophisticated in masking its illicit virtual activities.

North Korea has developed an internet-based model for circumventing international financial controls and sanctions regimes imposed on it by multinational organizations and the West, the report said.

Insikt Group said North Korea’s large-scale cryptocurrency theft took place on South Korean cryptocurrency exchanges.

Inside target network

To conduct online banking theft, the report said, Attackers likely spent anywhere from nine to 18 months inside a target network conducting further reconnaissance, moving laterally, escalating privileges, studying each organization’s specific SWIFT instances and disabling security procedures.

Although North Korea has turned increasingly to cryptocurrency theft because of its less regulated system, Stangarone said, because the value of cryptocurrency is highly volatile, it is less useful for Pyongyang than its cyberattacks on banks.

In 2016, North Korea made off with $81 million from Bangladesh’s central bank by exploiting the bank’s SWIFT interbanking system, according to cybersecurity firm Kaspersky Lab, as reported by Reuters.

Source: Voice of America

European Commission Welcomes Morocco’s Tax Reform

Brussels – The European Commission praised on Tuesday Morocco’s tax reform efforts.

“The European Commission greatly appreciates the efforts undertaken by Morocco to eliminate any contradiction between international standards and the Moroccan tax system”, said Paolo Gentiloni, European Commissioner for Economy, noting that “our cooperation on this subject remains very close”.

The European Commissioner made it clear that even if Morocco is still on the “gray” list of taxation at the EU level, this is not is not indicative of a lack of commitment or ambition in this direction.

“We welcome the reforms introduced by Morocco in the 2020 appropriation bill, which amend three preferential tax regimes that had been considered harmful by the European Union”, said Gentiloni.

“Morocco has not yet left the gray list and the reason is simply that the European Commission is awaiting the finalization of the OECD assessment of the Casablanca Finance City tax system,” he insisted.

He explained that “when the EU and the OECD assess the same measures in parallel, the European Commission always waits for the conclusion of the OECD procedure before formalizing its decision”, noting that “if the OECD concludes its procedure as planned, it is very likely that the European Union will permanently remove Morocco from the gray list in its next update in October”.

For the European Union, he went on to say, Morocco is much more than a neighboring country. “It is a friendly country and a key partner in many areas,” he said, adding that he is “very optimistic that we will soon be able to close this chapter for good and focus on deepening our partnership.”

The European Commissioner also recalled the commitments made during the last Morocco-EU Association Council in June 2019, which laid the groundwork for the “Euro-Moroccan partnership of shared prosperity”.

He stressed that “the idea is to work for a gradual economic integration between Morocco and the EU, as well as for inclusive, equitable and sustainable development”.

Source: Agency Morocaine De Presse

Valencia Region Keen To Collaborate More with Moroccan Companies, President

Casablanca – The Valencia region aspires to further strengthen its collaboration with Moroccan companies, said, on Tuesday in Casablanca, head of local government of the Valencia region Ximo Puig.

“Valencia is an open community which has always shown a dynamism in exports and which wishes to establish a real policy of collaboration with Moroccan companies”, underlined Puig at an entrepreneurial meeting organized by the Moroccan employers’ bodies (CGEM) aimed at bringing together Valencia’s businessmen and their Moroccan counterparts.

Puig noted that the region has become a hub for developing trade and commercial activities, pointing out that “commercial relations can only be developed if there is reciprocity, complicity and cooperation”.

To associate oneself with the community of Valencia means also to collaborate with an industrial region which has experienced strong growth in Spain despite all economic uncertainties, he said, adding that international trade links are part of the DNA of Valencian companies.

Highlighting the strong industrial potential of Valencia, Puig expressed the ambition of his region to be a partner of reference in this industrialization process taking place in Morocco.

Regarding the tertiary sector, he noted that the community of Valencia is characterized by its competitive services sector, adding that the region has become more dynamic in recent years with annual growth rates that break records in terms of the number of visitors and tourists.

For his part, President of the Morocco-Spain Economic Council Salaheddine Kadmiri underlined the vital dynamism of the Valencia region, noting that it represents the typical example of integrated development.

In this regard, he emphasized the industrial success of the region, noting that it is profitable in the long term and helps with the sustainability of companies.

Source: Agency Morocaine De Presse