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China-Africa Cooperation is Vital In the Post-COVID Global Economy

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By Yi Fan
With COVID vaccines rolled out in more countries, we have reason to expect to be more equipped in the fight against the pandemic. Exiting the pandemic and reviving the economy is a first-order priority for all countries.
Africa, like other parts of the world, has fought hard in containing the virus and reinvigorating the economy. Addressing the fallouts and looking forward to post-COVID recovery, governments of African countries have adopted comprehensive response plans. In Ethiopia, for example, relief asssitance has reached families and businesses, in addition to tax cuts and liquidity support.
For us all to navigate this trying time, cooperation and mutual help between China and Africa are critically important. Last week, China hosted the annual meeting of the Boao Forum for Asia, a China-based international forum with a mandate to explore better solutions for the common good of the whole world despite its name. Delegates from both online and offline discussed how the world can best recover from the pandemic. As countries in Africa are also striving for a stronger emergence from the pandemic, perhaps here are some of the priority areas where greater synergy can be built:
No. 1: China and Africa can grow faster together with the help of the Belt and Road Initiative.
The pandemic brought the world to a sudden halt. But for most of the time, the Belt and Road projects have remained resilient in keeping global supply chains running. The freight trips along the New International Land-Sea Trade Corridor were up by 104.9% in 2020. New routes were opened, such as the one from the southwestern Chinese city of Nanchong to Nigeria. A record number of goods, including the much-needed medical supplies, were shipped to cities in Africa,Asia and Europe. On this continent, the Ethiopia-Djibouti Railway, a flagship Belt and Road project, recorded an over 51 percent increase in revenue in the first half of 2020, when the pandemic was at its height. The railway was instrumental in ensuring the transportation of supplies in Ethiopia.
With China at the beginning of implementing its 14th Five-Year Plan, a guideline toward more efficient, equitable and sustainable growth, the Belt and Road Initiative is now aiming at higher-quality development. This, along with China’s own economic recovery, will foster greater connectivity, openness and inclusiveness, further energize the development of participating countries, and, as a result, inject greater confidence and impetus to global post-COVID growth.
No.2: China and Africa can embrace new prospects with a digital boost.
The pandemic has, to some extent, given a strong boost to the already-flourishing digital economy worldwide. New technologies and creative forms of business including 5G, online shopping and remote learning are gaining momentum, providing a new pathway for economic growth.
Both China and Africa will benefit from this digital boom. Africa, a continent with around 1.3 billion people,is now enjoying fast growth in telecommunications and e-commerce. As it seeks to improve its digital infrastructure, China is ready to share its experience in e-commerce, digital payment and logistics management.
Such mutually-beneficial cooperation is already paying off during the pandemic, as the two cooperated in selling African agricultural products, including coffee and chili sauce, on Chinese e-commerce platforms. Likewise, Kilimall, an online shopping mall set up by Chinese founders in Africa, has served as a window for African consumers to purchase Chinese products.
No.3: Multilateral economic cooperation can make us all better off.
The pandemic has reminded the world of the significance of cooperation. This is what both China and Africa have advocated as staunch supporters for multilateralism and free trade.
For Africa, the recently-commenced African Continental Free Trade Area (AfCFTA) has made the continent the world’s largest free trade area in terms of participating member states after the formation of the World Trade Organization. Signed by 54 African Union members, the AfCFTA will increase Africa’s capacity to respond to future crises, disease outbreaks and global economic shocks, and also assist in Africa’s economic recovery.
China too has made similar endeavors: setting up platforms for international economic cooperation, including the China International Import Expo and the China International Fair for Trade in Services; facilitating the signing of the Regional Comprehensive Economic Partneship (RCEP) agreement, one of the largest free trade agreements in recent history.
These efforts of China and Africa illustrate the critical importance of cooperation and multilateralism in unlocking economic potential. They may also present major opportunities for each other and the world at large, and pave the way for closer economic ties among countries and shared prosperity in the post-COVID world.
For a changing world eyeing for closer cooperation and a stronger, more resilient post-pandemic global economy, China and Africa, coming together, will surely set for the world a fine example of mutually beneficial cooperation, and contribute their share to the post-COVID global economy.

The author is a Beijing-based observer of international affairs

Intercontinental Addis rebrands

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After almost eight years of legal dispute Intercontinental Addis finally gave up and changed its brand name to Inter Luxury Hotel as of last week. Intercontinental Hotels Corporation (IHG) owned by the Crowne Plaza brand was in a legal battle with the local hospitality firm JH Simex, the operator of Intercontinental Addis Hotel.
Last year in June the Federal Supreme Court gave a final decision in favour of the US hotel brands owner IHG. The Supreme Court verdict indicated that the local firm, which has been operating for about 13 years, was also penalized to settle royalty compensation for the US hospitality business operator.

Cement price spike stiffens market

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While the government is working to solve the problem with the cement market, traders continue to distract the already disturbed market by selling a quintal of cement up to 800 birr.
The illegal increasing price of cement in the open market has sparked challenges on the construction industry. The government is a taking number of steps to improve the supply chain and increase the price of cement which is the main impute for the construction sector. Capital has observed that by night time in different parts of the country, cement wholesalers are selling cement up to 800 birr per quintal.
The government has set a factory production price for the 12 listed cement factories ranging between 233 birr and 300 birr to control the illegal brokers.
In an attempt to solve the chronic shortage of cement in the market in a sustainable manner, the Ministry of Trade and Industry has been working for more than one month by assigning overseers at the factories to control their operation, and has organized taskforces in each cities as a control measure by mayors, said Kassa Alamrew, acting head of public relation at the ministry. However, he sensitized that the problem is deep and it is difficult to solve the problem by control unless the problem with supply is solved, hence surge in price unfolds from time to time.
Most of the stake holders claim that there is little control measures taken by of government on the market, and they state this as the main problem to the price spike. Cement producers on the other hand are tackling a long list of challenges including, unfavorable supply-demand balance, higher cement prices, escalating production costs, low utilization rates, social unrest, and a lack of foreign currency.
“The government has shown a strong determination to create a conducive business environment,” stated on of the cement producers.
Cement is well known as the back bone of the construction world an in similar fashion Ethiopia is a typical heavy-consuming cement market. However, the Ethiopian cement production had proven insufficient in meeting demand. In previous years through the development of the construction industry, massive public investment and infrastructure projects have increased the demand and consumption of cement.
After asking manufactures to set constant prices and pursue their distributers, the ministry has set a standardized price one month ago. According to the list 233.45 birr is the lowest price set from Derba cement, while 300 birr is the highest price from Ethio cement factory.
Last summer, due to the shortage of production, in the retail market cement had been sold up to 600 birr per quintal. Different stake holders in the sector have pin pointed that the price hike has been caused majorly by the rise of illegal brokers and the inefficient control of the government on the market. Moreover, in an attempt to solve the chronic shortage of cement the ministry has also allowed companies who had Diaspora account to import cement to sustain the market. Additionally the government has allocated 85 million dollar to alleviate the shortage of spare parts in the factory.
According to the Ministry of Trade and Industry, the shortage is mainly due to lack of spare parts, power outages, lack of inputs, lack of leadership and professional skills, security problems, supply of raw materials, amongst other problems.
Currently, there are about 12 cement factories in the country with 345,000 tons of production capacity per day.

Freight forwarders express burden over NBE’s directive

Logistics operators argue that the amended directive of the National Bank of Ethiopia (NBE) on foreign currency earnings and retention is not putting in to account the services they are handling.
It is to be recalled that on March 9, 2021, NBE had amended the ‘retention and utilization of export earnings and inward remittances’ under directive no. FXD/70/2021.
One of the major changes on the revised directive was that exporters of goods and services as well as recipients of inward remittances shall have the right to retain only 45 percent of their export earnings and remittances in foreign currency indeterminately in a retention account after deduction of 30 percent surrender to NBE from the total earnings. These meant recipients shall use only 31.5 percent from the total amount they earned for unlimited timeframe after the deduction of 30 percent for NBE from the total amount and 55 percent after the deduction of NBE amount to banks. The banks share was an overall 38.5 percent from the total earnings.
In contrary, after the NBE deduction the previous directive gave a right for exporters of goods and services as well as recipients of inward remittances to retain thirty percent of the account balance for an indefinite period of time and the balance for up to 28 days. After the 28 days, any balance shall automatically be converted in the next working day into local currency by the customer’s ban using the prevailing buying exchange rate.
Logistics actors, who are mainly working on freight forwarding with their foreign investors, are arguing that the directive has induced an unnecessary pressure on their charge settlement that is supposed to be due at Djibouti.
One of the sector leaders told Capital that there are some logistics companies which are working with those investing in Ethiopia as foreign investors. He said that these logistics companies prefer to flow the service charge, which is in foreign currency, into Ethiopia than direct cost settlement for logistics charges. “We prefer to settle the charges via Ethiopian banks because we shall use the remaining amount for other local partner customers who are paying on birr to settle the cost in Djibouti,” he explained.
As a principle, NBE has a special arrangement for the allocation of foreign currency for port charges. It gives a right for the freight forwarding sector to access foreign currency and transfer port charges within seven days after the application, while the foreign currency shortage at banks push it up to three and more months.
Due to that logistics companies which are working with customers who are paying on foreign currency receive the commission via local banks and settle the port charge by themselves.
They reminded that more than 90 percent of the logistics service payment is not the earnings for Ethiopia. The amount is paid directly by clients to port and when payments are done via local banks freight forwarders are using the foreign currency reserve in order to settle the service charge for a given client and the balance for other local customers.
“After paying the due for port charge at Djibouti the balance which is a small amount is to be saved at local banks and shall be paid for other birr customers’ in the port service payment,” the sector experts said.
“However, the new directive has significantly reduced the amount that the hard currency generates thus placing them in pressure for extended arrears,” they claimed.
“After the NBE 30 percent deduction in the past we shall use the 70 percent for charges fee and for the remaining small amount we may save it under the 30 percent retain account for an indefinite period of time for the payment of other local customers payment at Djibouti,” they explained.
“Based on the new scheme for instance form USD 100 earnings the government (NBE and banks) totally deducted USD 68.5, which affects the logistics sector,” the sector operators added.
“Currently the amount we are using is reduced to 31.5 percent from the total earnings that is indirectly burdening the country on accrued foreign currency settlement for the port,” they say, adding, “the operation we used to follow was helping to ease the pressure on banks, while it has cut by the NBE new directive.”
The freight forwarding actors expressed that they are to put forward their expectation through their association, Ethiopian Freight Forwarders and Shipping Agents Association, in order to inform the matter to the NBE so as to arrive at a solution.