Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo Credit: World Bank

Nigeria’s UN Permanent Representative, Tijjani Muhammad-Bande, was elected on Tuesday to head the UNGA's 74th Session, starting in September:

UN SG António Guterres noted some of the “many important and admirable qualifications” he brings to the office. He cited the president-elect’s tenure as Nigeria’s UN Ambassador; his expertise in political science and public administration; and the “invaluable insights” he has into Africa’s challenges and world affairs in general, particularly regarding the Organization’s peace and security work, sustainable development and human rights.

A selection of perspectives, news updates on the TFTA, AfCFTA

(i) tralacs Gerhard Erasmus: Advancing the intra-African trade agenda by implementing the Tripartite FTA. Does the trade in goods regime of the TFTA offer an additional and perhaps better opportunity for some African nations to boost their trade with each other, and to do so sooner rather than later? Could this happen while the same States are participating in the tariff reduction discussions of the AfCFTA? Could those States that have ratified the TFTA Agreement fast-track the implementation of their undertakings to liberalize trade in goods? This Trade Brief provides a discussion of these and other pertinent issues related to the TFTA and AfCFTA agreements.

(ii) COMESAs Francis Mangeni:  What next after the coming into force of African Free Trade Area? In addition, trade facilitation programs should be appropriately prioritized. Time-related costs, arising from delays, are significant, estimated at over 90% of transport costs. Customs related delays result in a loss of about 23,000 jobs annually in Africa. Trade Mark East Africa, has accordingly invested over $500m in trade facilitation projects in Eastern Africa. If the route of long bilateral tariff negotiations is taken, AfCFTA can in the meantime be projected as a Free Trade Area for Trade Facilitation and not for elimination of customs duties. While this would be quite a novelty, it would make perfect sense, in reducing the cost of doing business in Africa, which is highest in the world.

There is quite some concern about revenue losses from tariff liberalization, estimated at $4bn, or up to 3% of GDP. The Afrexim Bank has therefore mobilized $ 1.5bn, and the World Bank also the same amount, to support countries through loans. The Afrexim facility will be on a cost recovery basis, and not profit based. The Afrexim Bank has established also the MANSA program, to assist in credit rating and de-risking, with a data set of 600,000 companies already. The name derives from the legendary Mansa Musa of the old Malian empire. In conclusion, then, the African Continental Free Trade Area is here. It changes the political and economic geography of Africa forever.

(iii) UCTs Professor Carlos Lopes: With the AfCFTA, "Africans benefit from intra-African trade". The President of Niger, Mahamadou Issoufou, is the main person to congratulate for having invested a lot in this cause as the AU Champion President in charge of the AfCFTA. He even went beyond what could be expected of him. He convened a dozen ministerial meetings which allowed the acceleration of the implementation of this plan, which culminated last year with the signing of the free trade agreement by 41 African countries. Today, 52 countries have already signed the Free Trade Area.

(iv) Frank Mattheis, Ueli Staeger: More work lies ahead to make Africa's new free trade area succeed. Finally, the free trade area will invariably pose economic challenges in AU member states. The promise of free trade agreements is to create wealth through increased competition, the equalisation of wages and the substitution of domestic labour with imported goods. International experience shows that the gains tend to be unequally distributed, especially if a free trade area involves a large amount of diverse economies. Entire economic sectors and communities can be heavily affected by the downsides: wage cuts, unemployment and environmental degradation. Questions abound. How will governments manage AfCFTA’s winners and losers when existing social protections are weak, and informal markets dominate many sectors? Will governments still respect the agreement even if it hurts some of their businesses and state companies? And how will they deal with the loss of customs revenue? Nigeria’s internal disputes and protectionism are a case in point. The road ahead to an effective free trade agreement that delivers results to Africans is still long.

(v) South Africas Department of Trade and Industry: Government steps up the pace of African trade integration. The Minister of Trade and Industry, Mr Ebrahim Patel noted that the establishment of the AfCFTA can be a game-changer for the local economy, providing a massive market for SA goods and services. He noted that exports to the rest of the continent already accounts for about a quarter million of South African jobs.  “If we can get the institutions and infrastructure right and build a deep business and social partnership in South Africa, the AfCFTA can add many billions of rand to GDP, create large numbers of new industrial jobs, attract and expand investment and strengthen the economy.  We will work in close partnership with investors and the local business community to realise this potential."  Deputy Minister Majola added that the AfCFTA would South Africa an opportunity to expand to new markets in North and West Africa, beyond the SADC region. “This will provide South African exporters and investors with much needed legal certainty and predictability of markets across Africa."

(vi) Zambia will not rush into ratifying the Africa Free Trade agreement. Speaking upon arrival in Addis Ababa, Zambia's Minister of Commerce and Industry, Christopher Yaluma, said Zambia will not rush to ratify the AfCTA agreement to be done before the forthcoming July African Union Heads of States Summit. He said the wide consultation was meant to ensure that the country instituted mechanisms to ensure that Zambia does not become a dumping site for substandard products. Mr Yaluma said the consultative process with relevant stakeholders was still on-going and had not been exhausted to warrant ratification during the operationalization of the CFTA at next month’s summit. He said government wanted to obtain full endorsement from the private sector as they will be the major drivers of the programme. The Minister said the signing of the CFTA framework by His Excellency President Lungu in March was testimony that Zambia was committed to being part of the single largest market in Africa. [Zambia's AU Commissioner recognised for championing the AfCFTA]

(vii) Kenya eyes free trade pact to expand dairy market in Africa. Livestock PS Harry Kimutai says a number of countries in West Africa have already made inquiries about Kenya’s long-life dairy products. “We are eying to expand our market to other regions and we are starting with West Africa that has already expressed interest in our milk products, especially the powdered milk,” he said. The West African countries that have shown interest include Liberia and Nigeria, with officials from Monrovia recently visiting the country. Kenya Dairy Board managing director Margaret Kibogy says Nairobi is seeking to lower of the cost of production from the current Sh25 per litre to Sh15 in order to remain competitive in the wake of the free trade area. “AfCFTA is a good initiative that will open up the market for Kenya and other African countries. However, it might not augur well with our high cost of production; that is why we want to address the overheads to an acceptable level that will make us competitive in the market."

(viii)  Norwegian Council for Africa's panel discussion on the AfCFTA (audio). The panelists were Grieve Chelwa (UCT), Andreas Moxness (University of Oslo) and Cathrine Jahnsen (Norwegian-African Business Association)

‘Regional security and integration’ in Central Africa under threat, Security Council warned (UN)

“Recent inter-communal tensions in eastern Chad opposing nomadic herders and sedentary farmers, as well as the attacks against villages in the Central African Republic remind us of the urgency of addressing the issue of pastoralism and transhumance”, said François Louncény Fall, referring to the traditional practice of moving livestock from one grazing area to another on a seasonal basis, which has been a persistent source of conflict in the region. On a more positive note, the UN Special Representative and Head of the Regional Office for Central Africa said he was “pleased” that the issue is “receiving increasing attention in Central Africa” and welcomed a draft regulation instrument on pastoralism and transhumance from a 27-28 May workshop in Kinshasa.

He reminded the Council that the UN Standing Advisory Committee on Security Questions in Central Africa remains “the primary platform” where the Economic Community of Central African States meet to discuss peace and security issues and recommends actions to address threats to regional stability. Given the inter-regional dimension of the tensions, Mr Fall made assurances that “UNOCA will continue to support ECCAS efforts in this area” and work with the UN Office for West Africa and the Sahel, “to promote cooperation and exchange of good practices between Central, East and West Africa on the issue”.

Kenya's horticultural sector raked in Ksh 153.7 billion, accounting for 25% of the total exports in 2018. Dr Chris Kiptoo: "I salute Kenya's horticulture sector for achieving a 33% increase in export earnings in 2018 against target of 25% in National Export Strategy. The floriculture subsector did even better through 38% growth. This is testimony of Kenya's potential as an exporting nation!"

Egypt: Combined mid-term review CSP 2015-2019, country portfolio performance review (AfDB)

Lessons for the Bank: Strengthen the private sector portfolio. The large and dynamic private sector offers business opportunities for the Bank. Yet, the private sector portfolio in Egypt is small, accounting for only about 16% of the total commitments. There is therefore a need to scale up private sector operations in light of the Government’s aspiration to strengthen the SME’s role in driving the fourth industrial revolution and improving social inclusion and youth and women empowerment through engaging in value added activities.  Lessons for the Government: Strengthen project/program development. A more streamlined process for developing the lending program is needed from the Government side. Given the dynamic nature of the development of Government plans and priorities during the past few years, the Bank tried to remain as flexible as possible to be able to accommodate those changing needs. Nonetheless, some projects had to be processed under a relatively short time, which could have compromised quality at entry; while other projects were appraised but were not further processed due to change of priority of the GoE. Going forward, the Government may strengthen its planning processes such that Bank interventions are jointly agreed in due time to enable the Bank to do the necessary internal planning. This would include placing greater emphasis and resources on project preparation studies to increase the number of investment ready projects.

DRC:  AfDB project appraisal report on the development of agricultural value chains in six provinces

PADCA-6P will be implemented over a five-year period (2019-2024) for a total cost of UA 22.153 million in the provinces of Kwilu, Kasaï, Haut Iomami, Iomami, Maniema, and Tshopo. It will target some 1,768,825 rural households, 60% of which are women, with 8, 394,125 direct beneficiaries, and build knowledge for the rural world at large.  The project’s specific objective is to improve agricultural production by (pdf): increasing the productivity of the growth sub-sectors, namely cassava, maize, bean/cowpeas, and rice; building the capacity of stakeholders to ensure the sustainability of investments in value chains; and promoting youth and women’s entrepreneurship.

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