Covid-19 presents business opportunities

Source: Covid-19 presents business opportunities | Herald (Business)

Statistics reveal that Africa imports 90 percent of its pharmaceuticals products

Sitshengisiwe Ndlovu

The World Health Organisation estimates the monthly Covid-19 needs of frontline health practitioners to stand at  89 million masks, 1,6 million goggles, 76 million gloves and 2,9 million litres of hand sanitisers.

The Covid-19 pandemic has triggered most countries to adopt protectionist and restrictive  measures   around  the exportation  of essential materials such as  food and medical supplies  as described by WHO.

Africa in contrast to the global world, has not imposed any export restrictions on medical supplies  due to the fact that most of those goods are not manufactured in Africa. Africa exports 0,5 percent  globally while the imports comprise 2,6 percent.

The ratio of exports to imports is five times with Africa importing more than she exports.

Export restrictions on medical supplies are mainly prevalent in Europe and Asia.

The export restrictions are mainly around  the export of face masks, with masks with filters sometimes referred as N95 being far more regulated than textile masks.

The impact of these restrictions has affected trade globally.

Studies by International Trade Centre have revealed that countries and regions that are reliant on global supply chains for medical and food supplies have been affected by these restrictions.

The WTO has come up with declarations to promote free trade and discourage   export restrictions during the current  Covid-19 pandemic especially around medical supplies and protective equipment.

Few countries have heeded the WTO call.

Furthermore the Organisation of Economic Co-operation and Development (OECD) and the G20 countries have also proposed a raft of measures to ensure open supply chains on medical supplies and other essential goods.

The two groups have advocated for the complete removal of tariffs, compounded with a total  ban on exports  restrictions and conditions that will be  transparent, targeted,  proportionate  and temporary if restrictions were to be applied.

It has not been easy for countries to co-operate.

More-so because studies of the novel Covid-19 are still ongoing, and countries have to contend with the resurgence of the virus that is always followed by containment measures that  always cripple  economies.

Self-reliance resilience, and adaptation has become  the survival strategy as dictated by the new  era.

In view of what has been narrated in the foregoing, Africa needs to   produce face masks, gloves, goggles and sanitisers for Africa.

International Trade Centre research has revealed that inputs in Africa are available to meet the demand in Africa  of  the mentioned products and even export to international markets.

A case in point studied by ITC is the production of sanitisers.

South Africa is the only net exporter of sanitisers in Africa.

Production of sanitisers requires, ethanol mixed with distilled water, glycerine and plastic bottles.

Except for glycerine everything is locally obtained in South Africa.

Africa has now a fully functional   Control of Disease Centre.

The strategy is to boost the manufacture of the essential medical and prevention requisites of the Covid-19 virus.

Statistics reveal that Africa imports 90 percent of its pharmaceuticals products and the export bans obtaining in these overseas traditional suppliers is a boon for the Micro Small Medium Enterprises(MSMES).

The case on the production of  sanitisers is but one of the supply chains that can be nurtured by MSMES through both backward and forward linkages.

MSMEs need to boost local and sustainable manufacturing to be effective participants within the Africa — intra regional trade.

Manufacturing creates value chains that will see Africa reap immediate benefits created by shortened supply chains.

Small drug companies should be supported by governments to manufacture drugs for Africa and reduce reliance on overseas supply chains.

The international trade environment remains too volatile to support the emerging MSMES.

The traditional medium of currency has been the United States dollar.

The dollar has been appreciating to the detriment of international trade.

Research reveals that 1 percent appreciation of the dollar results in a fall of 6 percent in the volume  of international trade .

A strong dollar has a negative impact on the MSMEs  as these entities initially suffer from lack of trade finance, and once the finance is available it becomes very expensive for the MSMES.

The Pan African Payment Settlement System designed by AfCFTA will have to be bolstered to cushion the MSMES  business on the onslaught of the dollar that is firming against other major currencies.

The use of local currencies through the African Export Import  Bank  may  assist these entities to participate fully in the opportunities that have come about due to Covid-19.

The MSMEs remain crucial drivers for the African economies. These entities have been the worst affected by Covid-19.

In the advent of the AfCFTA the resuscitation of  MSMEs will be a prominent priority with  governments ensuring an ecosystem and trade facilitation measures that will enable them to recover, become resilient and thrive.

Sitshengisiwe Ndlovu is president of OWITZIMBABWE: MBA/UNCTAD: Trade and Gender Linkages/ IAC Dip/Cert: Trade in Services and SDGs: Robert Schuman Centre of Advanced Studies/IDEPCert: Making the African Continental Free Trade Agreement Work. She writes in her personal capacity. For more on trade matters visit her Blog on website: www.owitzimbabwe.org

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