News Archive April 2019

AfCFTA Agreement secures minimum threshold of 22 ratifications for entry into force

The Chairperson of the AU Commission, H.E. Moussa Faki Mahamat, flanked by the AU Commissioner for Trade and Industry, His Excellency Albert Muchanga, received two (2) deposits of instruments of ratification of the African Continental Free Trade Area (AfCFTA) Agreement today, 29th April 2019.

The instruments were from H.E. Dr. Brima Patrick Kapuwa, Permanent Representative of Sierra Leone to the African Union (representing the 21st member state to do so) and H.E. Lamin Baali, Permanent Representative of the Saharawi Republic to the African Union (representing the 22nd ratification).

The Chairperson hailed the two deposits as timely and significant steps towards removing the fragmentation of African economies and markets, a process that will create a large market that is critical to increasing trade and investments on the continent.

The two deposits meet the minimum threshold of ratifications required under pdf Article 23 of the AfCFTA Agreement (4.67 MB)  for it to enter into force thirty (30) days after deposit of the twenty-second (22nd) deposit made by the Saharawi Republic. The AfCFTA Agreement will in this regard enter into force on 30th May, 2019.

All that is now left is for the African Union and African Ministers of Trade to finalize work on supporting instruments to facilitate the launch of the operational phase of the AfCFTA during an Extraordinary Heads of State and Government Summit on 7th July 2019.

The supporting instruments are: rules of origin; schedules of tariff concessions on trade in goods; online non-tariff barriers monitoring and elimination mechanism; digital payments and settlement platform; and, African Trade Observatory Portal.

The African Ministers of Trade are scheduled to meet in Kampala, Uganda in the first week of June this year to review work on these supporting instruments ahead of the Extraordinary Summit on the AfCFTA.

The Chairperson also paid tribute to the Champion of the AfCFTA, His Excellency Mr. Mahamadou Issoufou, President of the Republic of Niger, for his strong and sustained advocacy to have all African Union Member States sign and ratify the AfCFTA Agreement.

tralac’s Daily News Selection

DITE for Africa: Introducing the AU’s Digital Identity, Digital Trade and Digital Economy initiative. Download the pdf concept note (176 KB)

AfCFTA updates:

  1. This week in Arusha, Tanzania: EAC experts meeting on the AfCFTA

  2. Seychelles continues to evaluate Africa free trade pact now coming into force. Seychelles will continue discussions and negotiations before signing on to the AfCFTA, a deal that could open the door to more trade to and from the island nation, said a top official. “For Seychelles, we have signed the agreement, but we have not ratified it yet. This is because we feel that there are still negotiations and discussion to be done before we proceed,” Ashik Hassan, the director of trade at the ministry of finance, Ashik Hassan, told SNA. “For example, there are measures concerning rules of origin. Basically, it is one of the conditions that you need to meet to get the preferential rate of tariff. It makes sure that the product you are exporting into the African market originates from Seychelles,” said Hassan. Since the island nation’s exports are very limited, Hassan pointed out that it is important that the rule that is agreed on does not restrict Seychelles in any way. Seychelles exports tuna, he noted: “But then again how do we prove that it really originates from Seychelles when exporting."

  3. AU Commission prepares for single market launch in July. The four-day consultative workshop last week in Arusha attracted trade and Customs officials from member states of COMESA, EAC, IGAD and SADC. “AUC and development partners felt it important to build capacity and provide expertise to delegations from AU member states,” said the chairman of the AfCFTA negotiating forum, Alexander Rubanga from Uganda. Experts from the WTO, ITC, World Bank and Unctad attended the GIZ-supported workshop to equip trade and customs officials with the information needed to implement the agreement. Willie Shumba, the AUC senior expert and advisor on Customs and Continental Free Trade Area Unit, said the officials received extensive training on some elements of data transposition and alignment of data with the MFN applied tariff.

  4. Related: Zambia’s pending ratification of the TFTA Agreement: summary of a recent stakeholder workshop held in the Copperbelt

  5. New tralac Working Paper, by Gerhard Erasmus: The AfCFTA as a Strategy and a Design

REC updates:

  1. The EALA resumed its sitting today in Arusha. The 5th Meeting of the 2nd Session of EALA commenced this morning in Arusha and will conclude on 18 May. Key items during the three-week Sitting include the debate on the East African Community Youth Council Bill, 2017 and the Report of the Committee on consideration and review of the Accounts Report for the Financial Year ended June 30th, 2017. Also, to be tabled and debated in the House is a key report of the Committee of Agriculture, Tourism and Natural Resources on oversight with stakeholders for budgetary enhancement in the agricultural sector, an activity which took place in March this year. The whole House will also meet with a number of stakeholders. A sensitization workshop on Tripartite Transport and Transit facilitation programme (TTTFP) is planned to apprise the House of progress in the transport and infrastructure sector. The initiative has carried out baseline studies in 19 participating Member States (including EAC partner states). The workshop will unpack TTTFP legal instruments for the proposed Vehicle Load Management Agreement, as well as developed model laws and other standards. AFRODAD will also hold a session with the Assembly on iIlicit financial flows and sovereign debt crisis – in the context of Africa in general and East Africa, in particular. [The EAC’s calendar of events for this week]

  2. IGAD adopts a regional posture in its fight against tuberculosis at cross border areas. The recent five-day workshop brought together the heads of the national TB programme, experts on M&E and information system within the TB programme, and in-country national and district assessors. In 2018, IGAD Health and the USAID-funded Challenge TB Project conducted assessments to gather information on the situation and services related to TB prevention and control at the IGAD countries border areas, and to understand the current inter-country TB presumptive and patient referral system. The assessment collected data from 26 border areas Health facilities prioritized by IGAD for cross border activities and representing the IGAD member states of Ethiopia, Kenya, Somalia, South Sudan, Sudan and Uganda.

  3. ECOWAS moves to promote free movement and tackle trafficking in persons. The delegation from the ECOWAS Commission, in collaboration with IOM, the Nigeria Immigration Service and Nigeria’s National Agency for the Prohibition of Trafficking in Persons, engaged law enforcement agencies and community citizens from Nigeria, Benin and Togo in a four-day advocacy and sensitization campaign which ended on 26th April 2019. The exercise included roundtable meetings with the Road Transport Employers’ Association of Nigeria in Mile 2 Lagos state, interaction with transporters and drivers at the Jonquet motor park in Cotonou and the engagement of law enforcement officers and community citizens in the border areas of Seme-Krake border (Nigeria-Benin) and the Hilla-Condji border (Benin-Togo). During the sensitization exercise, the ECOWAS Commission’s Commissioner for Trade, Customs and Free Movement, Tei Konzi stated that the ECOWAS National Biometric Identity card (ENBIC) will serve to improve the security architecture of the region and mitigate the challenges of irregular migration in West Africa.

Kiprono Kittony: Regional integration should be made a priority across Africa (The Star)

By introducing healthy competition, regional trade usually puts pressure on local industries to improve competitiveness. For example, the recent case of Ugandan eggs being cheaper than those produced in Kenya is a wake-up call to Kenya to address the competitiveness of its agroindustry. We also need to identify the comparative advantages we enjoy as a region – such as a young labour force, recent investments in transport infrastructure and access to over 80 ports worldwide via Mombasa, among others – and leverage on these to develop joint import substitution plans. There are a lot of products we import as a region that we can produce by ourselves at a lower cost, helping us build regional capacity, reduce trade deficits and strengthen macroeconomic indicators. Importantly, much broader reforms are needed at a political level. This is because regional integration is generally more successful where there is minimal political and ideological difference among participating countries. Tanzania and Kenya therefore need to work on their issues; but so do Rwanda and Uganda, whose ongoing diplomatic stand-off has resulted in disruptions at their borders, impacting trade and investment. [The author is Chairperson of the Kenya National Chamber of Commerce and Industry. East Africa’s state airlines need to co-operate to grow]

Kenya-Ethiopia border initiative: a move towards sustainable peace. A joint commentary by Johan Borgstam (EU ambassador to Ethiopia), Stefano A. Dejak (EU ambassador to Kenya), Aeneas Chuma (UN Resident Coordinator in Ethiopia), Siddharth Chatterjee (the UN Resident Coordinator in Kenya)

Kenya fails to secure $3.6b from China for third phase of SGR line to Kisumu (The East African)

Kenyan President Uhuru Kenyatta returned from China without funding for the third phase of his signature standard gauge railway- a critical segment of the Northern Corridor project that is supposed to link the port of Mombasa with the Great Lakes Region’s landlocked states. Instead, Kenya bagged some $400m it says will be used to upgrade its 120-years old metre gauge railway to Malaba on the border with Uganda. Transport Cabinet Secretary James Macharia, who spoke to The EastAfrican on phone from Beijing, said Nairobi will henceforth treat upgrade of the Naivasha to Malaba metre gauge railway segment as a priority, even as it pursues funding for the remaining Naivasha-Kisumu-Malaba section of the SGR line. “We have agreed to work on upgrading the metre gauge railway as a priority so that once construction of the Nairobi-Naivasha section is complete in August, we can evacuate goods to Malaba on time,” Mr Macharia said, adding that the upgrade works will start in two months’ time. [Related: Editorial comment: Is the well of Chinese credit really bottomless?; EAC panics as China refuses to finance railway project; Reviving rail line to Kisumu needs more than new tracks]

Digital tax stamps: a waste of Uganda tax payer’s money? (The Independent)

Digital tax stamps are tamper-proof physical paper stamps with security features and codes that are applied to goods or their packaging to prevent counterfeiting. The stamps enable traders and manufacturers track the product’s movement and government to monitor compliance of the product and stamp. But the current situation both at the UNBS and URA shows that the initiative is already dead from its inception, and instead government is likely to incur costs with minimum or no returns. First, the initiative is targeting formal manufacturers who already have clear and audited production and distribution processes for tax purposes, signaling the digital tax stamp company will add limited value into the tax collection measures. Secondly, UNBS has a limited number of staff for not only covering the entire country but also for doing many things. Currently, UNBS covers only 17 entry points out of about 165 borders, leaving most of the borders with no manpower and an avenue for smugglers.

Global declining competition (IMF)

Using a new firm-level dataset on private and listed firms from 20 countries, we document five stylized facts on market power in global markets. First, competition has declined around the world, measured as a moderate increase in average firm markups during 2000-2015. Second, the markup increase is driven by already high-markup firms (top decile of the markup distribution) that charge increasing markups. Third, markups increased mostly among advanced economies but not in emerging markets. Fourth, there is a non-monotonic relation between firm size and markups that is first decreasing and then increasing. Finally, the increase is mostly driven by increases within incumbents and also by market share reallocation towards high-markup entrants.

Today’s Quick Links:

Kenya to open mission in Hargeisa to boost social, economic links

Kenya exports under AGOA deal grew by 25% last year

Anzetse Were: Why Kenyans and Africans do not feel economic growth

Tanzania farmers embark on commercial avocado farming project

Diplomatic ties between Tanzania-Israel bear socio-economic fruit

Mozambique integrated Liquified Natural Gas project: the AfDB has posted the Environmental and Social Impact Assessment summary and the Resettlement Action Plan summary

Joint communique of the leaders’ roundtable meeting of the Second Belt and Road Forum

UK’s Foreign Secretary starts first visit to Africa: Senegal, Ghana, Nigeria, Ethiopia, Kenya

ICT investments in OECD and Partner countries: trends, policies and evaluation (pdf)

UAE inaugurates Centre for Fourth Industrial Revolution

Seychelles continues to evaluate Africa free trade pact now coming into force

Seychelles will continue discussions and negotiations before signing on to the African Continental Free Trade Area (AfCFTA), a deal that could open the door to more trade to and from the island nation, said a top official.

The island nation in the western Indian Ocean has signed the agreement but has yet to ratify it.

The African Continental Free Trade Area agreement brokered by the African Union in March last year requires members to remove tariffs from 90 percent of goods, allowing free access to commodities, goods, and services across the continent.

The agreement, which needed to be ratified by 22 out of the 55 member states, can now become operational [once the 22 countries have deposited their instruments of ratification with the African Union Chairperson]. The Gambia’s parliament was the 22nd nation to [notify its parliamentary approval to] ratify the agreement on April 2.[*]

“For Seychelles, we have signed the agreement, but we have not ratified it yet. This is because we feel that there are still negotiations and discussion to be done before we proceed,” Ashik Hassan, the director of trade at the ministry of finance, Ashik Hassan, told SNA on Wednesday.

“For example, there are measures concerning rules of origin. Basically, it is one of the conditions that you need to meet to get the preferential rate of tariff. It makes sure that the product you are exporting into the African market originates from Seychelles,” said Hassan.

Since the island nation’s exports are very limited, Hassan pointed out that it is important that the rule that is agreed on does not restrict Seychelles in any way.

Seychelles exports tuna, he noted. “But then again how do we prove that it really originates from Seychelles when exporting,” he added.

Hassan said that on the other hand “as a country we are opening our doors to enable our producers to eventually trade more with other markets in the African continent at a now lower tariff. We have a high Gross Domestic Product (GDP) and we have a lot of potential in the African market.”

The major export originating from Seychelles is in the fisheries industry – the second top contributor to the island nation’s economy.

According to the figures of the Seychelles’ National Bureau of Statistics released in September last year, the exports of fresh and frozen fish from January to June last year rose to 5,025 tonnes – an increase of 116 percent compared to the 2,451 tonnes of the same period in 2017.

If Seychelles does not ratify the agreement, Hassan said that “this is simply because as a country we need to preserve the national interest. As an island state, our economies of scale is not the same compared to those landlocked countries in the African continent. We cannot ratify something that will put us at a disadvantage.”

The trade agreement is set to become operational within a month after the required number of endorsements are deposited with the African Union chairperson’s office. Once operational it will cover a market of 1.2 billion people and a combined gross domestic product of $2.5 trillion – making it the world’s largest free trade area since the formation of the World Trade Organisation seven decades ago.

 

[*] Find out more about the ratification process in tralac’s AfCFTA Status of Ratification infographic.

Zambian govt holds sensitization meeting on the TFTA

The Zambian government recently held a sensitization meeting with stakeholders on the Copperbelt mainly from the Chambers of Commerce and the private sector on the Tripartite Free Trade Area (TFTA). The meeting was held ahead of Zambia’s pending ratification of the TFTA Agreement.

The Sensitization was facilitated by the Department of Foreign Trade in the Ministry of Commerce, Trade and Industry.

Speaking at the event, Permanent Secretary in the Ministry of Commerce, Trade and Industry, Mrs Kayula Siame, who was represented by Chief Economist, Mr. Paul Mumba said once effected, the TFTA will spur a new web of opportunities in Zambia and beyond.

She said local exporters will be afforded an opportunity to competitively grow their international market and consumers will equally get a broader scope of products. 

“I urge the private sector to take advantage of the trade space that Government has created through the Ministry of Commerce, Trade and Industry and the opportunities that the TFTA will bring,” Mrs Kayula said.

At the same event, COMESA Director of Trade and Customs Dr. Francis Mangeni called on the private sector to actively participate in trade deliberations. 

“Quite a number of countries have involved the private sector in their negotiation delegations, Zambia must consider doing the same, as it will ease dissemination of information,” Dr Mangeni added.

The private sector present in the meeting, raised concern on what Zambia will contribute to the huge market considering the country’s current low production and poor quality goods.

They have however supported the idea of ratifying the TFTA cautioning that Government must improve the Manufacturing and Industrial Sectors if Zambia is to be relevant once the TFTA is in force. 

The participants were drawn from Chambers of Commerce in the districts of Kitwe, Ndola, Solwezi, Mansa, Kasama and Chinsali. The TFTA brings together three regions of East African Community (EAC), COMESA and the Southern African Development Community (SADC).