Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Shutterstock.com

Diarise: 35th ICE for Central Africa on the theme Digital transformations and economic diversification in Central Africa (23-27 September, Malabo, tbc)

Afreximbank’s support of the AfCFTA’s implementation:

  1. AfCFTA Adjustment Facility: Following the official launch of the AfCFTA, the region’s largest trade bank – Afreximbank - has unveiled a $1bn financing facility. Afreximbank President, Prof Benedict Oramah, reiterated that the facility will enable countries to adjust in an orderly manner to sudden significant tariff revenue losses as a result of the implementation of the agreement.”This facility will help countries to accelerate the ratification of the AfCFTA. You have started a movement. You must not look back. This movement is now unstoppable.”

  2. Pan-African Payment and Settlement System: “Today we will launch the Africa-wide digital payment infrastructure that we developed in collaboration with the African Union. It is a platform that will domesticate intra-regional payments, save the continent more than $5bn in payment transaction costs per annum, formalise a significant proportion of the estimated $50bn of informal intra-African trade, and, above all, contribute in boosting intra-African trade. The digital platform will deal a fatal blow to the underdevelopment of Africa caused by defragmentation of its economies. Our goal is to reduce, significantly, the foreign currency content of intra-African trade payments.”

  3. UNECA pilot project on informal cross-border trade along the Abidjan-Lagos corridor: The grant, part of Afreximbank’s effort to promote intra-African trade and support the implementation of the AfCFTA, was announced during a ceremony on the sidelines of the AfCFTA Business Forum. David Luke, coordinator of UNECA’s African Trade Policy Centre, said the project would build on the East African ICBT methodology which currently served as the best practice on the continent. That would help to ensure harmonization and comparability across Africa. The data collection exercise is scheduled to commence in September and to last four-months to take account for seasonal trends and fluctuations. The final outputs of the project will be launched in early 2020 and will include a comprehensive report detailing the scale, characteristics and challenges of ICBT along the corridor and a harmonized manual for ICBT data collection for the ECOWAS region to feed into the ECOWAS Regional Informal Trade Regulatory Support Programme.

Selected official, academic and civil society perspectives on the AfCFTA:

  1. Dr Hage Geingob’s remarks during the closing session of the 12th extraordinary session of the AU Assembly: “With the entry into force of the AfCFTA , the onus is on us to ensure the value addition and the beneficiation of our primary and raw products, in order to realise our dream of a single African market. It is time to wean ourselves from historical economic ties that are characterised by the export of raw and unprocessed products just to import final products and material back into the African market for consumption. We must therefore identify the value chains that will leapfrog our industries towards industrialisation, and remove administrative and structural bottlenecks that prevent us from building our industries. Africa must industrialise, and the time is now. The AfCFTA will lead to regional value chains, increased productivity, efficiencies, diversification, and competitiveness of our industries. This can only be done if our economic development is underpinned by the requisite knowledge-based capabilities, with a sufficiently enabling environment for public and private participation. Similarly, strong institutions, systems and processes will further advance industrialisation. Vocational education and institutions of higher education in Africa play a crucial role in providing the necessary skills-base and knowledge to the labour market for the Fourth Industrial Revolution.”

  2. South Africa’s President Cyril Ramaphosa says South Africa stands to significantly benefit from being part of the world’s largest single market, encompassing 55 countries with a combined population of 1,2 billion people and a combined GDP of $3,2 trillion. One of the key spin-offs is expected to be greater focus and urgency for infrastructure development across the continent to support economic activities.

  3. Morocco’s foreign minister, Nasser Bourita says joining the AfCFTA does not entail Polisario’s recognition. “Morocco has strongly adhered to the exercise of establishing the AfCFTA, but its signature and ratification of this agreement cannot be interpreted as an acknowledgement of a situation, fact or entity that does not recognize and threatens its territorial integrity and national unity.”

  4. Third World Network Africa Coordinator, Dr Yao Graham: “If we (Ghana) are going to benefit from the AfCFTA, it will take a lot of work, a lot of consultation, a lot of research and so on and so forth. Having the secretariat does not take away the need to do those things. Otherwise, the country could very well simply end up hosting the secretariat of an agreement, which other countries have better prepared themselves to benefit from rather than the country hosting the secretariat.”

  5. NACCIMA DG, Ambassador Ayo Olukanni: “The core issue here is how does (Nigeria’s) private sector take advantage of the AfCFTA. There is need for stakeholders to study the Agreement with a fine comb for a proper understanding of its nitty gritty. This will be part of the activities to start preparation for implementation. Nigerian banks which are already operating in West Africa and the rest of Africa, as well as operators in key sectors of the economy must be invited to stakeholders meetings to deliberate also work with the National Implementation Committee to be set up by government. Now is the time to act. We can no longer delay.”

  6. Former Indian ambassador to Nigeria and Algeria, Mahesh Sachdev: “India needs to anticipate the AfCFTA’s likely impact on its interests and try to influence and leverage it to enhance India-African economic ties. In principle, African economies becoming more formalised and transparent would be in India’s interest. While local manufactured items and services may ultimately compete with Indian exports, Indian firms can co-produce them in Africa. If handled in a proactive manner, the AfCFTA is likely to open new opportunities for Indian stakeholders in fast-moving consumer goods manufacturing, connectivity projects and the creation of a financial backbone. India donated $15m to Niger to fund the Niamey AU Summit. As the next step, New Delhi can help the AU Commission prepare the requisite architecture, such as common external tariffs, competition policy, intellectual property rights, and natural persons’ movement. It can also identify various African transnational corporations which are destined to play a greater role in a future continental common market and engage with them strategically. The cross-linkages of a three million strong Indian diaspora spread across Africa can also be very valuable. Finally, once the AfCFTA is accepted as beneficial game changer, the African elite could perhaps contemplate crossing another Rubicon: an India-African FTA.”

  7. Michael Ehis Odijie (Centre of African Studies, Cambridge): “Much of the potential of the free trade agreement rests on the assumption that this agenda will be comprehensively implemented. Yet there is nothing in the history of trade commitments in Africa to suggest that this is likely. The trade agreement will follow the existing model of regional integration in Africa and may therefore face in even greater measure some of the implementation and coordination challenges that have obstructed regional trade. The EAC, the most successful region in recent years, has encountered several obstacles, such as instability in the application of tariff and trade rules and trade disputes between countries. Following these disputes, some member states have ignored the rulings of the EAC Secretariat. This raises the question of whether the AU and institutions created to administer the African Continental Free Trade Area will have enough disciplinary power to make countries comply. It’s unlikely. Other matters of coordination have not been properly considered, such as aligning the trade agreement with industrial policy in the form of providing a continental framework to avoid predatory behaviour at the national level, which is one of the causes of dispute among countries of East African community. There is also the difficulty of aligning the new trade agreement with other commitments: for example, the recently launched post-Cotonou trade negotiations.”

  8. UN Deputy Secretary-General Amina Mohammed: “We will be working with you to coordinate and leverage complementary funding sources, from the African Development Bank’s Africa50 Fund to the African Union’s Program for Infrastructure Development in Africa, and China’s Belt and Road Initiative.”

Status of integration in the SADC region: report by SADC Chairperson, Namibia’s President Hage G. Geingob

The SADC Cross-Border Real Time Gross Settlement System has improved efficiency and reduced transaction costs. The system has performed impressively with 81 banks participating, and over 1.2 million transactions settled by end of 2018, representing ZAR5.21 trillion worth of SADC’s intra-regional trade. Despite these achievements, our efforts towards attaining regional integration have also encountered some challenges including:

Multiple and overlapping membership of our member states to various regional bodies, a challenge which SADC hopes will be addressed through the operationalisation of the COMESA-EAC-SADC Free Trade Area, and the establishment of the AfCFTA whose operational phase was officially launched yesterday. We, therefore, need to expedite the operationalisation of these initiatives while recognising that the Tripartite COMESA-EAC-SADC Free Trade Area is inevitable, if we are to expedite the continental Free Trade Area.

Some plans and commitments are either unrealistic or are not fully owned by Member States. This negatively affects implementation of the plans and the ultimate realisation of the set milestones. We, therefore, need to ensure that the Plans are realistic, and all Member States are fully consulted and subscribe to them.

Inadequate participation of the private sector in regional integration: we need to effectively bring on board the private sector as a critical partner to regional integration. Lack of prioritisation and implementation of plans and activities that promote regional integration. [Note: This report was presented at the inaugural Mid-Year Coordination Meeting of the AU and the RECs] [ pdf Statement by H.E. Geingob on the status of integration in SADC (380 KB) ]

Lauren A Johnston: A timely economic demography lesson from China for the G20 (pdf, IGD)

The 2019 Japanese Presidency of the G20 has added demographics, population ageing in particular, to the list of global risks for discussion. The G20 timing could not be more pertinent: 2018 marked the first time in history that persons aged over 64 out-number children under-five; some 85% of global GDP now generated in countries that are home to newly rapidly ageing populations. The majority of countries in South Asia and sub-Saharan Africa, meantime, confront rapidly rising working-age population shares for whom jobs do not appear in the pipeline. This policy brief is structured as follows: Part 1 explains China’s contemporary experience of demographic dividend and development. Part 2 outlines the Chinese concept of ‘getting old before rich’ and its extrapolation into the Economic Demography Transition. Part 3 discusses the logic of China’s fears of ‘getting old before getting rich’. Part 4 draws lessons from China’s experience of the economic demography transition thus far for today’s “poor-young” countries. Part 5 offers concluding thoughts and calls for enhanced global dialogue and demographics-related experience sharing.

Today’s Quick Links:

Policy makers meet in Kigali over protocols to protect vulnerable groups in Africa

AU high-level Ad Hoc Committee for South Sudan: communiqué

Greater regional trade in South Asia can empower women

China’s experience with high speed rail offers lessons for other countries


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