Building capacity to help Africa trade better

tralac's Daily News Selection


tralac's Daily News Selection

tralac's Daily News Selection

The International Trade Centre has posted a major new report - Diversifying trade in Africa: New strategy approaches for the AfCFTA  

This [AfCFTA] greement requires policymakers to align a wide range of complex and divergent trade strategies across the continent. To support this ambitious endeavour, the International Trade Centre has launched a report that assesses Africa’s existing national and sub-regional trade strategies to identify common trends and opportunities in the ongoing AfCFTA negotiations. Diversifying Trade in Africa: New strategy approaches for the African Continental Free Trade Area examines 181 strategic African trade and development documents in ITC’s Trade Strategy Map database. To achieve robust regional integration, the report suggests that Africa should focus more on manufacturing and innovation sectors that can add value. ‘If not designed properly and used by the private sector, the African Continental Free Trade Agreement will foster little economic benefits. This is why investing in the ‘design phase’ will be essential for African policymakers to align often complex and even divergent national trade strategies across the continent,’ said ITC Executive Director Director Arancha González.

Extract (pdf): The report suggests that African trade policy considerations should take into account the following trends:

While Africa’s regional strategy discourse is on manufacturing and industrialization, its national trade strategies continue to focus on agriculture and primary products. Agriculture accounts for less than 20% of the continent’s GDP but more than 60% of the priority sectors in African trade strategies. Manufacturing and high value-added sectors are rarely prioritized at both the country and regional level. This focus on a narrow range of agricultural and primary products only contributes to perpetuate, rather than evolve, existing trade relationships within Africa and between Africa and other regions.

With almost half of the world’s regional trade strategies, Africa is a champion of regionalism. Close to 80% of existing trade strategies in Africa identify trade integration and regionalism as crucial policy areas, but currently only 10% of African strategies have a regional scope, which indicates there is space for regionalism to grow.

There are significant similarities in the sectors that African countries prioritize in their national trade strategies, with agricultural products being prioritized across all regions. Differences can nevertheless be appreciated in the sectoral focus across African regions. North Africa focuses mostly on energy and bio-fuels while textiles and clothing predominate in subSaharan Africa. East Africa and West Africa focus on foodstuffs, animals and animal products. Services sector priorities are highly concentrated on tourism, transport and, to a lesser extent, on information and communications technology, and finance.

Given the degree of overlap of sector priorities at the country and regional level, developing a common space for a regional strategy for Africa is not going to be simple. Overlapping sector priorities could become a potential source of tensions during AfCFTA negotiations. Neighbouring countries find themselves very often prioritizing the same type of agricultural products. Examples include maize (Democratic Rep. of the Congo, Uganda, United Rep. of Tanzania), pulses (Ethiopia, Kenya), mango and onions (Burkina Faso, Mali), and cashew (Benin, Burkina Faso, Mali, Côte d’Ivoire, Gambia, United Rep. of Tanzania) among many other.

Table of contents: Connecting trade strategies with regional ambitions for African industrialization; Challenges facing regional trade strategies; African trade strategies over time;  Conclusions

Uganda and the AfCFTA: Impact Assessment Report (ECA)

The ECA and Trademark East Africa launched the national impact assessment report that presented the effects of the AfCFTA on Uganda, during a national AfCFTA stakeholder consultation meeting on 31 October 2019. Emphasizing that regional platforms are “the way to go” for developing countries to overcome trade challenges, the Minister for Trade, Industry and Cooperatives, Amelia Kyambadde, used her opening statement as an opportunity to applaud the ECA/TMEA partnership in supporting regional integration in Eastern Africa. 

The forum proceeded to present an Impact Assessment Report, set out by Andrew Mold, Acting Director of the ECA Office for Eastern Africa. With Uganda exporting close to 51% of her exports to the African market, the findings projected welfare gains post-AfCFTA, clearly demonstrating the importance of the AfCFTA to Uganda. To get the most out of the AfCFTA in Uganda, the role of manufacturing, services and value addition were rightly flagged up as priority areas to consider. The stakeholders also discussed how to make the most out of the electronic payment systems that the EAC has put in place to lower transaction costs for intra-regional trade.

Nigeria and the AfCFTA: An interview with the Director General of the Lagos Chamber of Commerce and Industry, Mr Muda Yusuf

Do you think we are ready for the opportunities to be offered by AfCFTA?  Well, I will say that some industries are ready. Some big companies are ready to take advantage because of their size, network, capital base, the resources that they have and because they can take the advantages of economy of scale easily. You can say that those ones are ready. You can also say that in the service sector our people are ready. Because the challenges you face in the service sector are not the same that you face in the real sector. We have our people in fashion, creative industry, entertainment, ICT, financial service, legal service, advertising, trading, that are ready to lash on the opportunities. These are areas our people will take advantage in. But when it comes to manufacturing, especially with the SMEs, I cannot say that we are ready.

African Industrialisation Day, World Export Development Forum updates

(i) Arkebe Oqubay: Why industrialisation is vital for the AfCFTA  to succeed.  In my view, at least three interventions are required for the AfCFTA to succeed as a development opportunity: A commitment and strategic focus on industrialisation; Increase marginal share in global exports; Invest in connectivity and infrastructure.

(ii) ODI Africa Industrialisation Day perspectives: Dirk Willem te Velde: Digitalisation and innovation are vital for African manufacturing;  Linda Calabrese: Lessons for Tanzania on value chain integration; Stephen Gelb: Lower tariffs are not sufficient for industrialization; Karishma Banga: The digital economy and the AfCFTA

(iii) World Export Development Forum puts focus on value addition for inclusive growth in one Africa. Inclusive economic growth across Africa hinges on ensuring greater value addition in manufacturing, agriculture and services. The successful implementation of the African Continental Free Trade Area will be critical to ensuring this. That was the message from public and private-sector leaders at the opening of the 19th World Export Development Forum taking place in Addis Ababa. The opening of WEDF 2019 coincided with the 30th anniversary of Africa Industrialization Day reaffirming the event’s focus on addressing key priorities of the African continent. Opening the event, Ethiopian President Sahle-Work Zewde said: “It is high time to expedite [of the African Continental Free Trade Area] implementation in order to unleash a complementary economic ecosystem among African nations. It is imperative we leverage the collective market size that we have as a continent.  By creating a complementary economic system, we will be able to reap the full potential of our respective nations and become a major player in the international trade arena.”

(iv) ITC Executive Director Arancha González: "We also know that the AfCFTA has the potential to change the trading landscape of Africa and boost intra-Africa trade by more than 50%. However, if policies are going to work, they need to work for everyone—and that includes women. For this reason, the past two days, ITC, the AUC  and the UNECA  have worked with more than 40 women business associations representing one million African women entrepreneurs and producers to develop priorities to shape an AfCFTA that works for women. We will continue the discussion into next year by bringing together women and trade policymakers.”

(v) Representatives of over 43 African countries call for harnessing SEZs to drive Africa's industrialization. More than 220 African experts and policymakers representing 43 countries and 60 African economic zones on Tuesday called for harnessing the potential of special economic zones to spur industrialization in Africa. They made the joint call on Tuesday during the fourth annual meeting of African Economic Zones  in Addis Ababa,  held under the theme "Special Economic Zones: Accelerator for Industrialization in Africa."  The Ethiopian Minister of Transport, Dagmawit Moges underscored the crucial imperative to further tap into the economic potential of free zones by creating synergy with other relevant infrastructures. "There is a strong need for transit and transport corridors to link Special Economic Zones with national and regional centers.”

Mehdi Tazi Riffi, AFZO President stressed that "AFZO was put in place by Africans, for Africans and to develop successful African Special Economic Zones." The Africa Free Zones Organization, which currently has more than 72 members representing 37 African countries, envisages improving the attractiveness of economic zones by "setting up of tailored model for economic zones development.” Prior to the ongoing meeting in Addis Ababa, AFZO had previously conducted four similar regional meetings on SEZs in Ghana, Gabon, and Togo, eventually bringing together more than 500 participants from 30 different countries. [Nigeria Export Processing Zones Authority: N1.45trn goods smuggled into Nigeria from Benin Republic annually]

(vi) "China has focused a lot of attention to the industrialization of the African continent" the ITC Executive Director told Xinhua on the sidelines of the Africa Industrialization Day commemoration event.  “It (China) has focused a lot in manufacturing," Gonzalez said, as she emphasized other emerging potential areas in the industry sector that are benefiting from and attracting Chinese engagement across Africa. “First, I think now there is interesting opportunity that is coming in two other sectors, one is agro-processing, so helping Africa transform a lot of the raw materials, agricultural commodities that this continent produces into processed products. The second sector, still under leverage in my view, is a big opportunity in the services economy," Gonzalez said, adding investment in the health, education, logistics, and digital connectivity areas will also make a more competitive African economy.

(vii) A high-level meeting of policymakers, regulators and industry experts in the field of pharmaceuticals and trade opened in Addis Ababa, Thursday to discuss a bold path towards affordable pharmaceuticals through leveraging the African Continental Free Trade Area.  The Continent is home to 11% of the world’s population yet it carries 25% of the world’s burden of disease. If implemented, pooling procurement of essential drugs and products and expanding local pharmaceutical production on the continent is seen as a critical pathway to the prosperity of African citizens, thereby achieving universal healthcare in Africa. Executive Secretary of the ECA, Vera Songwe, told the meeting that 50% of all children who die before the age of five in the world are in Africa. The meeting discussed the role of African businesses in driving the growth in this sector as well as the need for financing instruments to facilitate pooled procurement. These include a strategic fund, levy and social bonds that can link up with financial markets.

Country updates

(i) Rwandan industrialists have claimed that the importation of rival products, high cost of electricity and imported raw materials and operating below capacity were hampering their competitiveness on local and continental markets. The challenges were highlighted on Wednesday during the celebration of Africa Industrialization day. Constantin Rugaba, the Sales and Marketing Manager at Master Steel, a factory that manufactures construction materials, said imported rival products have led their sales to decrease. Telesphore Mugwiza, Director General of industry and entrepreneurship department in the Ministry of Trade and Industry, said lack of competitiveness among local manufacturers is driven by high production cost and operating below production capacity.

(ii) Nigeria's Minister of Industry, Trade and Investment, Niyi Adebayo, has called on African countries to implement strategies that would promote industrialisation and diversification of their economies in order to optimise the opportunities offered by the  AfCFTA agreement to African economy. Adebayo said: “The road ahead to realising these opportunities are tough and challenging but we have no choice but to tackle them head on.” He made the call yesterday at the 2019 edition of the Africa Industrialisation Da), which took place in Calabar, Cross River State. He also called for increased intra-African trade to lessen the continent’s exposure to external macroeconomic shocks and protectionist trade policies. [Nigerian government invests additional $250m in Sovereign Wealth Fund]

(iii) Nigeria's federal government on Thursday said it has resuscitated the Presidential Mines Surveillance Task Force to curb illegal mining and environmental degradation. The Task Force, which would be operating in all states of the federation, will also be responsible for plugging revenue leakages and institutionalisation of the National Council of Mining, and Mineral Resources Development. The Minister of Mines and Steel Development, Olamilekan Adegbite, who disclosed this in his presentation to the National Economic Council also updated members of the current relationship between the federal and state governments in relation to fiscal governance of solid mineral sector.

Today’s Quick Links:

ATAF conference: AfCFTA deal unsettles revenue authorities

Egypt: 17.2% hike in exports to COMESA in 2018

CBN: Nigeria imports $600 million cassava derivatives annually

Planets aligning for SA firms as huge Mozambique gas projects get moving

South Africa's metals and engineering sector boasts third positive year despite global downturn

Ghanaian businesses must be competitive to benefit from free trade system

Advancing Sustainable Development Goal 14: Sustainable fish, seafood value chains, trade and climate


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