In March 2022, South African International Relations and Cooperation Minister Naledi Pandor reaffirmed the commitment of her government to a continental monetary union, also known as a ‘common currency’. She said South Africa supports the creation of African monetary institutions – the African Central Bank, African Investment Bank and African Monetary Institute – as pillars of the common currency system that would be implemented. This move, she said, would support continental economic and trade integration, a process already embarked upon with the founding of the African Continental Free Trade Area (AfCFTA).

This trade brief attempts to cast light on the prospect of an African continental common currency by examining the inter-relationships of the types of economic integration arrangements and the economic rationale and potential pitfalls of a single currency. It also discusses the experiences of existing currency areas in Africa and gives an update on the progress towards monetary unification in the ECOWAS and EAC regional economic communities.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The state of indebtedness in sub-Saharan African has been extensively detailed in a previous tralac trade brief. That brief showed that the region was already struggling with high levels of indebtedness before the COVID-19 pandemic. Specifically, debt-to-GDP ratios had already been rising sharply before the outset of the pandemic and have only worsened since. It is therefore crucial that countries in the region seriously consider the levels of their debt sustainability and take corrective steps in ensuring that it does not spiral out of control.

Unfortunately, the continent finds itself in this worrying state hardly a decade since the IMF and World Bank launched the Highly Indebted Poor Countries Initiative (HIPC) which slashed the debt burdens of about 30 low-income countries on the continent. Fortunately, there are several International Monetary Fund (IMF) channels available to mitigate the debt burden and provide for debt relief, which will be the focus of this paper.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

This trade brief will provide an overview of the state of indebtedness (including both public and private debt) for sub-Saharan Africa (SSA). This will cover the period of 2015-2021, with a specific focus on the effect of the COVID-19 pandemic on indebtedness in the continent. Data sources consulted include the latest International Monetary Fund’s (IMF) Regional Economic Outlook (April 2021) and World Bank databank, particularly the International Debt Statistics.

Debt-to-gross domestic product (GDP) levels in sub-Saharan Africa have doubled over the last decade to over 56%. Coupled with record economic contractions across the region as a result of COVID-19, this is a recipe for a debt crisis. Moreover, it will be increasingly difficult for countries to finance themselves in a slow or even recessionary economic environment in the absence of a globally available vaccine. Scarcely a decade since the IMF and World Bank launched the Highly Indebted Poor Countries (HIPC) initiative, which slashed the debt burden of some 30 low-income countries on the continent, politicians and campaign groups across the continent have called for outright debt cancellations, in addition to requests for longer suspensions of servicing and repayments for the continent’s poorest countries.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

Investment facilitation has increasingly become a hot topic in international regional and national investment policy-making discussions. According to the United Nations Conference on Trade and Development (UNCTAD), ‘[i]nvestment facilitation covers a wide range of areas, all with the ultimate objective of attracting investment, allowing investment to flow efficiently, and enabling host countries to benefit effectively.’ Investment facilitation includes, among other principles, transparency, investor services, simplicity and efficiency of procedures, coordination and cooperation, and capacity building. It is one of the services of one-stop investment centers and investment promotion agencies to facilitate and expedite the entry and establishment of investments into the host economy and to assist with access to incentives and support programmes.

Several existing investment legal instruments (international, regional and bilateral, even national) have paid minimum attention to investment facilitation. Investment facilitation crucial for development and should not be isolated from the broader investment policy or law. Governments and intergovernmental organisations are calling for the inclusion of investment facilitation into international investment legal investments and policy. The bulk of existing international investment agreements concluded by African countries, do not contain investment facilitation provisions. A few of the existing treaties have included investment facilitation in preambles and objectives, and occasionally in the substantive provisions.

This Trade Brief seeks to describe how investment facilitation features in the investment treaties concluded by African countries and the implication thereof. The Brief will provide a brief overview of the investment treaties concluded by African countries among themselves and with selected partners, and attempts by African countries to include investment facilitation.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

The COVID-19 (Coronavirus disease 2019) pandemic is an unprecedented crisis facing the world and the global economy. Its social, welfare, health and economic consequences have been felt and will be experienced for some time yet. The severity and duration of such negative consequences largely depend on several factors, including the speed at which a vaccine can be developed, the feasibility and possibility of herd immunity, the natural course of the virus’ infection trajectory, and perhaps, most importantly, the level of economic and developmental assistance as well as global partnerships in combatting the negative consequences of the virus.

This Trade Brief will detail the latter as we focus on funding in times of crisis available from the International Monetary Fund (IMF). We discuss types of funding available from the IMF and highlight their qualification criteria and attached conditions. Finally, we present an overview of emergency funding currently approved to African member states.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

The 74th session of the United Nations (UN) General Assembly (UNGA 74) opened on 17 September 2019, with the General Debate taking place from 24 to 30 September 2019. This was a session of particular significance for the addressing of climate change and stimulating targeted action on the sustainable development goals (SDGs). There were numerous agenda points of UNGA 74 that had a specific focus on sustainable development, on Africa, and on sustainable trade. A particular talking point for Africa was the addressing of illicit financial flows which collectively siphon off billions of dollars out of Africa every year. It is essential that a global partnership is developed to stem this flow and to allow African countries to take the lead in generating the necessary funds for SDG realisation and sustainable support.

Although progress has been made towards achieving the SDGs and selected targets by 2030, it is clear that a redoubling of efforts and much greater global cooperation is needed to ensure their realisation by 2030. There are multiple challenges that countries and regions face, and a renewed spirit of multilateralism and global partnership is needed to pursue targeted interventions, to secure finance, and to ensure sustainable development. UNGA 74 gave countries and parties the opportunity to take stock of the SDGs and to identify interventions and critical entry points that have the potential to target and accelerate progress in achieving multiple SDGs. Developing countries are often stymied by lack of financing, knowledge access, and capacity to address the SDGs. It is only through global cooperation that these goals will be timeously and properly realised.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

This working paper investigates illicit financial flows (IFF) in Africa, which have been estimated to have averaged 25% of developing country trade in the decade 2006-2015. These flows deprive a capital-scarce continent of the very resource it requires to advance industrially. Improved governance, both at the regulatory level and the level of macroeconomic management, is required if Africa is to make progress in addressing IFFs.

The paper focuses on IFFs as a result of import and trade price misinvoicing (trade-based IFFs), which represent conservatively more than 50% of the total of IFFs impacting Africa. This misinvoicing (of goods at prices that are either above or below the fair market price) leads to capital transfers either out of (outflows) or into (inflows) a country.

By partitioning Africa according to the export specialisation categories of countries, meaningful insights can be gained as to the nature and drivers of IFF. Specifically, both common and unique factors are at play in fuelling the growth of IFF in two major categories of export specialisation: exporters of extractives (fuels, metals and minerals) versus the residual, which are the diversified and the agricultural specialist exporters.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

This working paper provides some key insights into foreign direct investment (FDI) flows within Africa. It covers investment flows into Africa from the rest of the world, as well as intra-African flows.

The paper highlights key sources and destinations of FDI for Africa. Available FDI data for Africa will also be discussed which will highlight the main destinations and sources of African FDI. FDI prospects for the region as well as new FDI developments in the region will be discussed.

In addition, this paper will consider new greenfield investment on the continent which remains an important driver of industrial development, employment, and growth creation. This paper will also detail the important role that growth in manufacturing and investment has to play in developing the continent.

The paper will also provide a brief overview of current investment regulation, competition regulation and investment governance issues of importance being effected on the continent. Finally, a brief discussion of considerations for inclusion in the Investment Protocol for the African Continental Free Trade Agreement (AfCFTA) will ensue.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

Among the various tools used to drive export competitiveness, the exchange rate has always taken pre-eminence and has in practice proved to be capable of stimulating export demand when its movements have resulted in a real depreciation. South Africa is no exception, and depreciation has for many years been an explicit component of industrial policy.

New research suggests, however, that the role of the real effective exchange rate (REER) in explaining export growth has become a lot less important than supply side factors, participation in global value chains and policy uncertainty.

This working paper uses both graphic and quantitative techniques to understand the relationship between disaggregated sectoral exports and the sector-weighted real exchange rate for the period from 2005 to 2017; with attention paid to the ‘breakpoint’ that follows the global financial crisis of 2009.

The results strongly indicate that for 14 out of 15 sectors, the REER has become less influential as a driver of export performance for the period after the global financial crisis. Furthermore, the response across sectors differs widely and suggests that industrial and trade policy should be finessed to accommodate the specific responses of each sector. In some cases, there is little benefit to be derived from depreciation and policy should instead focus on enhancing competitiveness using a supply-side approach.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

Many exciting developments are occurring in the distributed ledger technology (DLT) and blockchain space in the world and in Africa. Much opportunity exists in the continent to leverage the benefits of blockchain in reducing costs, increasing efficiency, and ensuring trust and security in a myriad of applications. The technology is still in its infancy but as it gains in popularity and trust we should see it flourish.

There has been a surge of interest in cryptocurrencies (which are based on blockchain technology) such as Bitcoin amongst millennials in Africa. The appeal of Bitcoin and other cryptocurrencies is that it often requires less time than other pursuits and has no upfront costs in trading. However, it still remains quite a gamble given its great volatility and fluctuation in value over the short term. Cryptocurrencies have the potential to disrupt remittances in Africa of which many rely on. Participants are finding cryptocurrencies to offer a cheaper solution to the expensive problem of transferring funds across borders.

This Trade Brief introduces the reader to the DLT concept, particularly its application in the blockchain, and provides an overview of how this technology works, a brief history of its adoption, prospects for future use, and its relevance in the trading economy of Africa. The paper then highlights the challenges, applications and opportunities for adopting this technology in the African economy as well as its potential in simplifying the value and supply chain in trade. Adopting regulations for blockchain and DLT technology should lend a certain degree of credibility and further encourage its uptake as a reliable and secure medium of exchange.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.