African trade deal could lift millions out of poverty

Mine workers wearing face masks looks on at the end of their shift, amid a nationwide coronavirus disease (COVID-19) lockdown, at a mine of Sibanye-Stillwater company in Carletonville, South Africa. (Reuters)
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Updated 28 July 2020

African trade deal could lift millions out of poverty

  • Once in force, the AfCFTA will bring together 1.3 billion people across 55 countries with combined GDP of $3.4 trillion

JOHANNESBURG: A pandemic-delayed African free trade deal, if fully implemented, could boost incomes across the continent, pull millions out of poverty and cushion against the negative fallout from COVID-19, the World Bank wrote in a report on Monday.

The African Continental Free Trade Area (AfCFTA) was due to come into force on July 1, but that proved unworkable after the virus forced widespread border closures and halted talks between governments over the removal of tariffs.

It may now begin operating from the start of 2021.

The pandemic is expected to cost Africa up to $79 billion in lost economic output this year alone with the additional risk of millions of job losses.

“In this context, a successful implementation of AfCFTA would be crucial,” the report said. “(It) is a major opportunity for Africa, but implementation will be a significant challenge. Lowering tariffs is only the first step.”

Once in force, the AfCFTA will bring together 1.3 billion people across 55 countries with combined GDP of $3.4 trillion.

World Bank researchers estimated the trade deal would lift 30 million Africans out of extreme poverty and 68 million from moderate poverty by 2035.

Full implementation could increase real income in Africa by 7 percent, or nearly $450 billion, mainly by reducing the cost of trade through the elimination of tariffs and red tape.

Ivory Coast and Zimbabwe — countries with the highest costs of trade — could see income gains of 14 percent.

The volume of total exports would increase by almost 29 percent, according to the World Bank, with exports between African nations rising 81 percent. 

Exports to non-African countries would increase 19 percent.

“The report estimates that compared with a business-as-usual scenario, implementing AfCFTA would lead to an almost 10 percent increase in wages, with larger gains for unskilled workers and women,” the report said.


Bailout will keep Air France-KLM afloat for less than year: CEO

Updated 21 September 2020

Bailout will keep Air France-KLM afloat for less than year: CEO

  • ‘If we base it upon the past few weeks, it is clear that the recovery in traffic will be slower than expected’
  • Governments are coming under pressure to tie airline bailouts to environmental commitments

PARIS: Bailouts provided to Air France-KLM by the French and Dutch governments will keep the airline flying less than a year, its CEO Benjamin Smith said Monday and evoked the possibility of injecting new capital.
In an interview with the French daily l’Opinion, Smith also warned that calls for airlines to contribute more to fight climate change could be catastrophic for their survival which is already under threat due to the coronavirus pandemic.
When countries imposed lockdowns earlier this year to stem the spread of the coronavirus airlines faced steep drops in revenue that have claimed several carriers.
A number of countries stepped in with support, including France which provided $8.2 billion to Air France and the Netherlands which received a $2.9 billion package.
“This support will permit us to hold on less than 12 months,” said Smith.
The reason is that air traffic is picking up very slowly as many northern hemisphere countries are now fearing a second wave of infections.
“If we base it upon the past few weeks, it is clear that the recovery in traffic will be slower than expected,” according to Smith, who said when the bailout was put together the airline was expecting a return to 2019 levels only in 2024.
Smith said discussions were already underway with shareholders on shoring up the airline group, and steps would be taken before the next regular annual meeting in the second quarter of next year.
“One, three or five billion euros? It is too early to put a figure on a possible recapitalization,” he said.
The airline group had $12.12 billion in cash or available under credit lines.
Major shareholders include the French government with a 14.3 percent stake, the Dutch government at 14 percent, as well as Delta and China Eastern airlines which each hold an 8 percent stake.
Governments are coming under pressure to tie airline bailouts to environmental commitments.
One proposal that has come from a citizen’s convention convoked by President Emmanuel Macron would cost airlines an estimated $3.6 billion.
Smith said the imposition of environmental charges on the industry would be “irresponsible and catastrophic” for Air France-KLM.