Jambo Africa Online’s Senior Editorial Correspondent, FRANCOIS FOUCHE, puts together a collage of news titbits from across the world impacting on Africa’s business.

A new research report from the WTO and International Renewable Energy Association (IRENA) contained valuable insight. Bew are a few useful extracts.

Value creation along the solar PV supply chain involves a broad range of goods and services. Some of these goods and services are supplied domestically, but many others are traded across borders.

Included in the value chains are machines to manufacture solar PV wafers, cells, modules and panels, along with selected solar PV components, such as PV generators, inverters, PV cells and, where relevant, the parts needed to produce some of these goods.

Estimating international trade flows of goods along the solar PV value chain is challenging. Many goods related to sustainable energy systems are highly specialized and often relatively new in the market. Others have multiple uses, so they are used in both renewable energy and non-renewable energy applications. This means that the classification and identification of solar PV and other renewable energy goods are difficult to achieve uniformly across governments.

Trade patterns reveal how solar PV supply chains have become increasingly globalized over the past two decades.

Trade (imports plus exports) in the HS subheading where selected solar PV components are classified increased significantly between 2005 and 2019. In 2019, trade in these goods totalled slightly more than US$ 300 billion

Machines to manufacture PV panels, along with their parts, registered a significant increase too, totalling close to US$ 136 billion in 2019. 

The globally integrated nature of solar PV supply chains is also visible in the relatively high levels of two-way trade between countries, as both the components and machines to manufacture solar PV equipment criss-cross the world. 

The top 10 exporters where selected solar PV components and machines to manufacture solar PV panels are classified are (all important importers.

For example, Germany, the 6th-largest trader, represented, on average, 6% of world exports and 5% of imports. 

Malaysia – the 10th-largest trader – represented, on average, 3% of exports and almost 2% of imports. 

Together, the 10 largest exporters represented around 82%, on average, of the total value of exports of these goods between 2017 and 2019, and around 70% of imports.

Two-way trade is also prevalent for specific solar PV products.

The results of recent empirical research imply that globally integrated supply chains have played a key role in helping to reduce solar PV costs over the last few decades.

For example, one study found that the increasing size of solar PV module plants serving the global market through trade allowed those plants to reap significant economies of scale, which contributed

almost 40% to the decline in the cost of solar PV modules since 2001 (Kavlak, 2018). 

Another study, which used a sample of 15 countries over the period 2006-15, found that an increase in imports of solar PV cells and modules was associated with lower solar PV module prices at home (Hajdukovic, 2020). 

These findings suggest that trade policies geared at promoting globally integrated markets can play a role in supporting broader action to reduce costs and make solar PV and other renewable technologies more affordable.

Given the critical importance of services in solar PV supply chains, trade policies must seek to promote the global integration of markets, not only for solar PV-related goods, but also for services.

International trade enables firms, governments and consumers around the world to access the most efficient, innovative and competitive goods and services needed to tap the potential of solar and other renewable energies (Garsous and Worack, 2021).

Trade can therefore boost the efficiency of solar PV at home and can help to replace old, polluting energy technologies, thereby catalysing efforts to accelerate the transition towards sustainable energy systems and achieve the SDGs. 

What is more, the ability to “split up” a key facts production process by locating its different stages in different sites makes it more likely that more countries can participate in trade by specializing in tasks of varying degrees of complexity along the solar PV chain (World Bank Group, 2020b; WTO, 2014). 

Several developing countries are already part of global value chains in solar PV components or have the potential to become part of these chains by building on existing industrial capabilities in related  sectors (Jha, 2017; Nahm, 2017).

However, a country’s ability to participate in the solar PV supply chain, or any other type of supply chain, is by no means assured. It depends on fundamentals such as factor endowments, geography, market size and institutions, along with policies to promote trade and foreign direct investment, upgrade the information and communications technology infrastructure, strengthen skills, improve access to finance and ensure a balanced and effective intellectual property system (World Bank Group, 2020b).


Scoring gold at the Olympics

The glory of winning a gold medal is a massive incentive for athletes competing in Tokyo but the impressive bonuses on offer add another more lucrative dimension to the games. 

The size of the bonus on offer varies hugely by country. For example, British athletes do not receive bonus for winning a gold medal whereas American competitors get $37,500 for every gold they take home, according to website Swim Swam.

Britain, like several other European nations, offers its athletes year-long funding and training rather than a bumper pay-out.

Successful athletes from Indonesia are awarded a prize of $746,000 (equivalent of R11 million) for gold, not a bad day at the office at all. 

Singapore offers its successful Olympians around $744,000.


South Africa’s External Sector

The pandemic brought the first current account surplus in 18 years.

South Africa’s structural current account deficit is driven by the large & negative primary income balance.

The current account was in deficit from 2003 – 2019, averaging 3.6% of GDP over the past decade.

The trade balance has been positive since 2016, as weak domestic growth reduced the demand for merchandise imports.

However, the primary and secondary income balances remained negative, respectively at 2.7% and 0.8% of GDP, from 2010 – 2019.

These balances reflect dividend and interest payments to non-residents and transfers to neighbouring countries under the Southern African Customs Union (SACU) agreement.

Driven by weak imports and favourable export prices, the current account registered a large surplus in 2020.

South Africa’s current account surplus reached 2.2 % of GDP in 2020 (full year).

Favourable price dynamics supported exports of goods, i.e., gold exports increased by 61% and other merchandise exports by 4%.

Merchandise imports contracted by 12% due to the collapse in domestic demand and lower crude oil prices (the Brent crude oil spot price fell by 33% year-on-year).

The services trade balance worsened from 0.3% of GDP in 2019 to 0.8% in 2020, mainly because of the devastating impact of the pandemic on the tourism sector.

The primary income balance likewise remained negative, albeit smaller (1.9% of GDP, vs 2.8% in 2019), driven by lower gross dividend payments.

The secondary income balance was also negative, at 0.9% of GDP.

South Africa’s current account dynamics remain favourable at the beginning of 2021.

The current account balance registered a surplus of 5% of GDP in Q1 2021 due to the surplus on the merchandise trade balance and a smaller deficit in the primary income balance.

In Q1 2021, goods exports increased by 25% year-on-year in value terms, supported by high export prices, whereas goods imports grew by only 6% year-on-year, benefiting from the appreciation of the rand.

South Africa’s terms of trade improved for the 7th  consecutive quarter.


South Africa’s economy benefits from high commodity prices, but we are not producing more.

Commodity prices have increased substantially from end-2020 and are now above their pre-pandemic levels, supported by better global growth prospects and in some cases, supply-side factors. 

Metal prices are expected to rise by 36% in 2021, before falling back in 2022. The demand for base metals is likely to remain strong, given the push toward greener growth (e.g., electric vehicles). 

Oil prices also projected to average US$62/bbl in both 2021 and 2022. 

Agricultural prices are expected to rise in 2021, before stabilising in 2022 according to the World Bank.

Commodities play a big role in South Africa’s economic trajectory.

The mining sector accounts for only 7% of GDP but for > 50% of all merchandise exports (mostly platinum group metals, gold, iron ore, and coal). 

Economic growth outcomes have long been linked to commodity cycles.

The most dynamic periods of growth in SA have been associated with the discovery of diamonds, gold, and more recently, the 2000s commodity super cycle.

Commodity cycles also affect financial variables, such as investment flows, the exchange rate, and the performance of the stock market.

There are uncertainties around current commodity price increases.

South Africa’s terms-of-trade gains are likely to moderate after this year. 

(Terms of trade refer to the ratio of a country’s export prices and its import prices).

The main risks to the outlook are related to the evolution of the pandemic. 

For metals, faster-than-expected withdrawal of the stimulus in China would pose significant downside risks, while the US infrastructure bill would present an upside risk. 

Over the medium term, the rebalancing of China’s growth from investment- to consumption-driven implies that its growth will be less commodity-intensive than before.

Favourable terms of trade will benefit growth but will not address structural growth constraints.

The favourable global environment will support SA’s growth and macroeconomic stability through its impact on the fiscal and external accounts. However, if the cycle is misinterpreted as a new trend, this could mean a delay in much-needed reforms, as happened before.

Also, the impact on mining production may be limited by structural constraints and operational adjustments after the pandemic. Investment in the sector remains weak, on the back of policy uncertainty related to both some elements of the Mining Charter and operating costs (electricity, transport, logistics, etc.).

In this context, to ensure that South Africa fully benefits from the favourable commodity cycle and set the base for sustainable growth, it will be critical to deliver on economic reforms to improve business confidence as well as reforms to foster exports (e.g., trade facilitation, logistics, and transports costs, notably in rail and ports).