- Complaints Hit East Africa’s Trade
The continuous introduction of tariff and non-tariff barriers are hampering intra-regional trade and putting integration at risk in East Africa.
Many manufacturers are complaining of encountering tariff and non-tariff barriers that blocked them from entering regional markets.
East African Community partner states that the manufacturers are largely in confectionery in Kenya, oil and fats in Uganda and a wheat and juice producer from Tanzania.
Yasin Billo, export manager of Tanzanian industrial conglomerate Bakhresa Group, said the company currently has 15 trucks stuck at the Tanzania-Kenya border because the Kenya Revenue Authority changed the rules and systems for exporting goods to the country.
However, Tanzanian Commissioner for Customs and Excise Ben Usaje said Bakhresa Group believed they were being mistreated because of the continued dispute over Kenyan confectionery.
Customs officials in Tanzania have blocked Kenyan confectionery products because they were allegedly manufactured using sugar that was imported at zero rate, instead of the EAC’s 100 per cent CET.
In 2017, Kenya faced a sugar crisis that prompted importation of sugar at a zero tariff.
Under the EAC regulations, this rate should have been 100 per cent, since sugar is a sensitive product that needs protection from dumping.
Mr Usaje said it is this sugar that the confectionery manufacturers are using and such products will not be allowed into the Tanzanian market unless a 25 per cent import duty is paid on them.
Mr Usaje added that Kenyan confectionery will not enjoy duty free rates in the Tanzanian market until the EAC forms another committee that declares their processes legitimate.
An earlier committee formed by the EAC to verify the origins of ingredients used in the process of manufacturing confectionery compiled a report that Mr Usaje says was “non-committal.”
“Products manufactured using industrial sugar when transferred to the EAC qualify for preferential tariff treatment provided they meet the criteria set under the EAC Rules of Origin, 2015, and other conditions set under the EAC Customs Management Act,” the report says.
The report adds that sugar for industrial use was not imported under the provisions of the Kenya Gazette notice announced in May 2017.
Mr Usaje questions the methodology used by the committee to come to the conclusion that confectionery makers used industrial and not ordinary sugar.
These tariff and non-tariff barriers coupled with what appear to be political manoeuvring are harming trade across the region.
The EAC Trade and Investment Report shows that intra-regional exports dropped by 42 per cent from $3.7 billion in 2013 to $2.6 billion in 2016.
The 2017 preliminary trade and investment report shows that intra-EAC exports recovered slightly to increase by nine per cent.
This is attributed to favourable weather conditions that contributed to a bumper harvest in the region.
The report also notes that intra-EAC exports increased from $2.6 billion in 2016 to $2.9 billion in 2017 on account of growth in manufactured goods such as cement, textiles, sugar, confectionery, pharmaceuticals, fats and oils moving freely in the region.
The report notes that in 2017, most East African partner states were able to resolve non-tariff barriers, facilitating increased trade in products like oils and fats and dairy products.
The states also discontinued policies that suspended the implementation of sections of the EAC Common External Tariff.
However, these non-tariff barriers are back, threatening the gains that were made last year.
In addition to the trade disputes between Tanzania and Kenya, Uganda has also been experiencing its own challenges.
For example, Uganda’s cooking oils and fats can’t enter the Tanzanian market because of alleged failure to meet the EAC Rules of Origin.
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin
Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges
Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.
The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.
The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.
“We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.
Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.
Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.
In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.
The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.
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