African trade and business events to diarise:

1. Blue economy, inclusive industrialization and economic development in Southern Africa: Inter-Governmental Committee of Experts meeting (18-21 September, Mauritius)

2. A high-level summit during the United Nations General Assembly: Africa: Open for Business summit (26 September, New York)

Launched, today, in Lusaka: A business guide to the African Continental Free Trade Area Agreement (ITC)

The International Trade Centre today released a business guide that will help the private sector and policymakers better understand and navigate the recent African Continental Free Trade Area Agreement. A Business Guide to the African Continental Free Trade Area Agreement – which was formally presented to the AU Commissioner for Trade and Industry Albert Muchanga during the World Export Development Forum taking place in Lusaka – captures the current state of play of the provisions and protocols of the agreement. The guide provides insights into the business implications of AfCFTA with a view to equip stakeholders to both anticipate and influence policies. Enhanced knowledge of expanding markets and free movement of people provides African business with a unique opportunity to be the first movers in adjusting their business practices and exploring regional opportunities. The guide points out that the AfCFTA already has cooperation mechanisms in place, such as in addressing non-tariff barriers and in resolving disputes, that African businesses can benefit from as they seek to deepen their regional integration. Extracts (pdf):

Chapter 2: Protocol on trade in goods. Currently there is no consensus on the tariff modalities to govern goods trade liberalization. Since the Kigali Summit in March 2018, divergences have increased, culminating in the African Ministers of Trade adding to the options on the table regarding the ultimate level of ambition, at their last AMOT meeting in Dakar in June 2018.

The G7 (Djibouti, Ethiopia, Madagascar, Malawi, Sudan, Zambia, Zimbabwe) is arguing for greater flexibilities, and specifically that the final agreement should result in 85% liberalization, with the remaining 15% to be divided into a group of ‘sensitive’ and excluded baskets, the precise percentages of each to be determined. The remaining 48 Member States are agreed that the initial tariff cuts should result in reducing 90% of trade to zero, with opinion on the size of the sensitive/exclusion amounts divided. To complicate matters further, at their meeting on 3-4 June 2018, in Dakar, Senegal, African Ministers of Trade have questioned the wisdom of having an exclusion basket, since a number of the RECs do not, and there are concerns that having one will undermine the shared goal of doubling intra-African trade. These divergent positions have substantial implications for businesses wishing to access tariff concessions. Notable in this regard is that, by some estimates, excluding even 1% of intra-African imports from liberalization could result in no effective actual import liberalization, meaning the entire exercise could have been pointless. Therefore, how these debates are resolved is consequential for the AfCFTA project, and its outcomes should be closely monitored by companies seeking greater access to African markets.

Chapter 7: Roles and opportunities for the business community. As key stakeholders, the role of the business community in influencing the outcomes and successful implementation of the AfCFTA is important to ensure the potential benefits to business and the wider community are realized. Some of the specific ways in which African business can contribute to the AfCFTA negotiations include: Hiring experts (if in-house expertise is not available) to carry out reviews of draft texts and proposing new texts and amendments to existing texts using international best practice; Using existing national and regional business organizational structures to engage with national trade negotiators; Collaborating with other stakeholders involved on trade and integration issues to lobby governments and negotiators to take account of issues that may not come to the table (such as the concerns of informal cross-border traders) which nevertheless have an impact on the sustainability of the agreement and its protocols; Sharing data on challenges and successes of implementation to lobby governments.

AU, RECs coordination underpins successful implementation of ACFTA (COMESA)

Secretary General of COMESA, Ms Chileshe Kapwepwe, and the AU Commissioner of Trade and Industry, Mr Albert Muchanga, noted there were many overlapping activities between the COMESA-EAC and SADC Tripartite FTA and the ACFTA that needed to be harmonized. Ms Kapwepwe noted that the AU, as the continental body, was best placed to bring together all the RECs to coordinate activities related to the implementation of the AfCFTA. She said: “Such as forum would help in identifying areas of complementarity and overlaps that can be avoided to ensure the activities of the RECs feed into the achievement of their goals and that of the continent.”

Currently, seven countries have ratified the ACFTA while three have ratified the tripartite FTA. A minimum of 22 ratifications are needed for the ACFTA to enter into force while 14 are required for the TFTA. The seven are Kenya, Rwanda, Eswatini, Chad, Niger, Guinea and Ghana. Under the tripartite FTA, Kenya, Uganda and Egypt have ratified. The AU Commissioner said: “We are confident of getting the 15 remaining Member States to ratify the ACFTA by December this year and start implementation one month after. We have set 31 January 2019 as the commencement date of the implementation of the ACFTA.”

African countries need to develop a policy response to the digital economy (dti)

Dr Nimrod Zalk, industrial development advisor in the office of the Director-General of the SA Department of Trade and Industry, yesterday delivered the keynote address at a workshop convened in Pretoria by Global Economic Governance Africa and the African Trade Policy Centre. Dr Zalk highlighted that a global process of rapid technological change, involving unprecedented growth in digital information will have far reaching consequences for the South Africa and other African countries. The rise of digital platforms and e-commerce will reshape the retail sector and in turn have deep implications for developing countries’ industrialization processes, which have been at the heart of all successful cases of development. This requires African countries to develop policy responses that address the rise of digitization in ways that ensure the policy space to harness potential benefits and ameliorate negative consequences.

South Africa to participate in G20 trade ministers’ meeting (dti)

Changes brought on by the Fourth Industrial Revolution and the rise of inclusive global value chains will be at the centre of the G20 trade ministers’ meeting that gets underway on Friday. South Africa’s Trade and Industry Minister Rob Davies is set to attend the session in the resort city of Mar del Plata, in Argentina. The Department of Trade and Industry said the meeting will focus on key factors for G20 policy making to support participation and upgrading in inclusive Global Value Chains in the agricultural sector at regional and global level.

Investments in IDA countries: private participation in infrastructure, 2013 – 2017 (World Bank)

But it’s not all sunshine and roses for every IDA country. Indeed, these are outliers. Our pdf report (687 KB)  notes that only 30 of the 75 IDA countries received private investments at all during the five-year period we measure. Even amongst them, almost half had only a single project in five years. Nevertheless, the good news here is that the trend line is picking up. In fact, 2017 was a stellar year compared to the past for private infra-investments in IDA countries - totaling $7.9bn across 35 projects and garnering 8.5% of total private investments in EMDEs in 2017, up from 4.3% in 2016. Also, private infra-investment as a share of GDP is more significant for IDA countries at 0.8% than non-IDA countries at only 0.3%.