tralac Daily News
African Union Heads of State and Government have underscored the urgent need for member states to kick-start trading activities, under the African Continental Free Trade Area (AfCFTA).The decision was adopted during a virtual meeting of the 13th Extra Ordinary Session of the Assembly of the Union on the AfCFTA, held on Saturday 5 December 2020, under the Chairmanship of H.E. Mr Cyril Ramaphosa, President of the Republic of South Africa and Chairperson of the African Union (AU).
“Today we stand on the cusp of a new era in the progress of our continent. The moment that we have all been working painstakingly towards has finally arrived…We are all filled with a great sense of pride at how far we have come to reach this moment”.
Speaking from the headquarters of the AfCFTA Secretariat in Accra, Ghana, the Secretary General of AfCFTA, Wamkele Mene stressed that integrating 55 markets will not be easy but giving up is not an option.
SG Wemkele called on AU Member States to aggressively implement the AfCFTA as one of the tools for effecting a fundamental structural transformation of Africa’s economy and placing Africa on a path of long term industrial development. He said “women in trade, young Africans and SMEs, confront significant challenges when attempting to benefit from trade agreements”. Adding that, for the AfCFTA to be inclusive and to ensure shared growth across the continent; women, young Africans and SMEs have to be at the heart of its implementation.
Select updates from member states
EAC beats AfCFTA tariff offer deadline (The East African)
With less than a month to the African Continental Free Trade Area coming into effect, the East African Community submitted its tariff offer on December 3, beating the December 5 deadline. EAC’s tariff offer now brings the number of countries to 40 that are ready to join the continent-wide duty-free quota-free movement of goods on January 1, when trading under the AfCFTA agreement starts. By press time on Friday, 14 countries that had signed the agreement had not yet submitted their tariff offers. These are Algeria, Angola, Comoros, Djibouti, Eritrea, Ethiopia, Libya, Morocco, Mozambique, Saharawi Republic, Somalia, Sudan, Tunisia and Zimbabwe.
China is prepared to assist countries in Africa launch a continental free trade and investment platform, drawing on its international trade experience, a senior Chinese official said in Nairobi on Sunday. Chang Hao, deputy director-general at the International Cooperation Centre of China’s National Development and Reform Commission (ICC-NDRC), said that China will enhance trade in Africa through its implementation of the Belt and Road Initiative (BRI), which aims to connect 70 countries through infrastructure. “We are prepared to assist African countries through the promotion of trade facilities, building Africa’s industrial capacity to develop its value chain and building complete proposals for China and African countries to implement the various partnerships which exist between them,” Chang said.
Treaties implemented by Regional Organizations (ROs) among which the eight Regional Economic Communities (RECs) have piloted integration across the African continent. This survey has two objectives: take stock of progress at market integration and understand the causes of the African ‘proximity gap’. The review singles out two areas for reducing intra-regional trade costs: adopting simple rules of origin, i.e. rules that are business friendly rather than business owned (details in annex A3) and ‘taking seriously’ the Trade Facilitation Agreement (TFA). New estimates suggest that if the average time in customs for imports at the African Union level were to be reduced to the average time for exports, that is reduced by 49 hours, this would be equivalent to a reduction of 2.7% on tariffs in importing countries. The greatest challenge ahead is increasing the provision of Regional Public Goods (RPGs).
Statistics South Africa is scheduled to release its GDP numbers for the third quarter on Tuesday (8 December), with analysts hopeful that the data will point to signs of a strong rebound after the country’s coronavirus lockdown. “Based on the large trade surpluses achieved in recent months, the consensus is for a blockbuster current account surplus of 3.7% of GDP after a 2.4% of GDP deficit during Q2,” the BER said. “If such a large surplus is achieved, or especially if it is even larger than expected, it is likely to add fuel to the fire of those investors who have turned more positive on the rand exchange rate, at least versus a weakening US dollar.”
President Muhammadu Buhari has stated that African leaders should increase collaboration to battle insecurity in the continent through the implementation of arms control instruments and embargoes. The President disclosed this at the virtual 14th extra-ordinary session of the Assembly of the African Union (AU), in a speech themed, “Silencing the Guns.” On Sunday, Buhari stated that Africa also faced issues relating to peace due to terrorist threats across the nation. “The major challenge for Africa today is achieving a new trajectory of peace, security, stability and a conflict-free Africa, following threats of terrorist activities and other crimes across the continent,” he said.
KRA loses Sh7.7bn retail sector taxes on depressed sales (Business Daily)
The Kenya Revenue Authority (KRA) lost Sh7.71 billion in collections from retail and wholesale traders such as supermarkets in the year ended June 2020 on the back of eroded consumer purchasing power amid reduced operating hours in the final quarter. The Treasury disclosures show total tax receipts from the wholesale and retail trade sector, which have been increasing by double digits in recent years, contracted to Sh53.81 billion from Sh61.29 billion the year before.
Ugandan manufacturers threaten to sue Kenya over trade barriers (Daily Monitor)
Kenya has not responded to threats from the Uganda Manufacturers Association to take the country to the East African Court of Justice to get redress on “unfair trade practices”, which the association claims its own government is abetting. In a statement released on Thursday, UMA, the umbrella association that brings together Ugandan industrialists and manufacturers, said that Kenya has barred a number of its exports from accessing Nairobi. UMA says Kenya is questioning the origin of Uganda’s products, even those with valid certificates of origin.
Cabinet has approved the setup of an Energy Infrastructure Fund, which will draw money from the Treasury to aid establishment of electricity projects. “We should be allocated money from the Consolidated Fund every year into that fund so that when we have some infrastructure to build, we get a hand from that fund,” Energy Minister Maria Goretti Kitutu said. The fund will be used to set up government infrastructure in the electricity subsector including power generation, transmission and distribution projects as well as any required feasibility studies.
Four years to go, single currency still elusive (The East African)
Only four years remain for the East African Community’s Monetary Union to come into effect, and analysts now say that it is almost impossible to beat the 2024 deadline. On November 30, 2013, EAC Heads of State signed the Monetary Union Protocol in Munyonyo, Kampala, outlining a 10-year roadmap to realise a single currency. In 2014, member states ratified the East African Monetary Union, which is the third pillar in the region’s integration process. However, governments in the region are still harmonising the policies required to attain a single currency by 2024.
Africa’s aviation industry represents a huge market that the continent’s airlines need to exploit more fully, with technology and AI offering the way forward for expansion, regional development experts said Thursday. “Technology and smart technologies are offering this fantastic opportunity, so let’s make use of AI, let’s make use of the Internet of Things, let’s capacitate our people to revamp and to rethink our industry, to make sure that both our airports and our airlines cater for the very near future,” said Dr. Amani Abou Zeid, African Union Commission for Infrastructure and Energy, during the opening session of a virtual workshop.
Govts must rescue Africa’s aviation industry from pandemic turbulence (The East African)
Africa’s air transport industry is set to face another grim year with delays to the region’s economic recovery, job losses and without the continent’s governments urgently providing emergency relief to the entire sector. Governments are also yet to establish a vaccine distribution network, unblock the flow of pledged financial support and systematically implement common Covid-19 testing. Measured by supply, demand and profitability, Africa, which had previously seen modest growth, has been one of the hardest-hit regions in the world.
Importers defy ban by flooding market with illegal sugar (The Standard)
Unscrupulous businesses are having a field day bringing in huge amounts of sugar into the country illegally. The smuggling ring is also exposing Kenyans to substandard products and further weakening the ailing local sugar industry. Large imports of brown sugar have made its way here over the last five months despite a ban last July by the Ministry of Agriculture, partly aimed at enabling the local players to stay afloat. The excessive inflows are such that importers had by October exhausted the duty-free import quota they are allowed to get from Comesa countries over 2020.
The impact of the COVID-19 pandemic on already slowing economies has made tourism particularly vulnerable, becoming the hardest hit sector so far in Africa. It has not just been a health pandemic, but it has impacted the economic and social life of communities. However, it is proven that tourism is uniquely placed to lead future recovery, exemplified in post economic depression, Ebola eras, oil crisis, financial crisis. The sector will provide the jobs that people need to bounce back and will drive economic growth that will help whole African countries to recover.
Kagame to chair Smart Africa board meeting (The New Times)
Heads of State and Government from 30 countries are meeting today virtually to discuss the work of Smart Africa, an alliance of African countries aimed at accelerating the continent’s digital transformation. The ninth board meeting will be chaired by President Paul Kagame, according to the statement from the organisation’s secretariat, currently based in Kigali. “This meeting will discuss Smart Africa’s core deliverables for the just-ended calendar year and the goals for the coming year,” the statement reads in part.
As the business landscape transforms to leverage exponential developments in technology, the expansion and adoption of new business models have rendered the big giants potentially vulnerable due to complexity, scale and entrenched business models. The customer has moved to centre stage as convenience has transitioned from privilege to right, and choice has become ubiquitous. The rapid compounding of complexity has forced organisations to adopt agility as part of the fabric of business operations.
The rise of cryptocurrency transfers to Africa (Africa Feeds)
Cryptocurrency is steadily growing acceptance in Africa. Similarly, the use of cryptocurrency for money transfers to Africa is also on the rise. Fintech companies use cryptocurrencies such as Bitcoin to mitigate problems associated with traditional money transfers to Africa and within Africa such as high fees. Africa is the most expensive region to send money to in the world. Intra-Africa money transfers are even higher than sending money to Africa. The use of cryptocurrency-powered money transfers is expected to lower these high costs.
The Board of Directors of the African Development Bank has approved a $20 million concessional investment from the Sustainable Energy Fund for Africa (SEFA) to establish the COVID-19 Off-Grid Recovery Platform (CRP). The $50 million blended finance initiative, will provide relief and recovery capital to energy access businesses, supporting them through and beyond the pandemic. “This initiative underlines the African Development Bank’s commitment to the accelerated growth of Africa’s decentralized energy industry, based on renewables, as a key driver for universal energy access goals,” said Dr. Kevin Kariuki, the African Development Bank’s Vice President for Power, Energy, Climate and Green Growth
A surge in attacks on Nigerian farmers is having a knock-on effect on the country’s food reserves, Bloomberg has reported. Citing the All Farmers Association of Nigeria, the news agency said stocks had declined to less than 30,000 metric tons, a fraction of what the country of 200 million people requires. President of the association, Kabir Ibrahim, said growing insecurity had made it difficult to augment those supplies.
African environment ministers have pledged to rally behind efforts to accelerate a green and inclusive economic recovery to boost economies and social systems in the continent amid COVID-19 related shocks. The ministers said in a joint statement issued in Nairobi on Friday evening at the end of a virtual summit that promoting the health of ecosystems lies at the heart of efforts to hasten pandemic recovery in the world’s second-largest continent. “Whilst this pandemic is having a profound negative impact on sustainable development and our efforts to combat environmental degradation and eradicate poverty, it also presents opportunities to set our recovery on a path of transformative sustainable development,” said Barbara Creecy, South African Minister of Environment, Forestry and Fisheries.
Never have Africans come together the way we have during this catastrophic situation – we have seen the best of humanity through this trying period. The Covid-19 pandemic is one of the most devastating global health and economic crises in modern history. The crisis has affected virtually every facet of socioeconomic functioning, including public finance, which is concerned with the capacity of governments to mobilise resources, primarily for building institutions to promote security, competition and market development, as well as for redistributive purposes.
How can Central African countries reconfigure existing transport highways which interconnect them, while building and linking new ones in a way that engines and supports structurally transformative economic activities along and near these routes? “At this point in time when everyone agrees with us on the need for the structural transformation of our economies with particular focus on the productivity gains that stem from vertical and horizontal economic diversification, we see development corridors as a game-changer for countries across the subregion,” said Lot Tcheeko, an ECA official coordinating efforts towards the brainstorming exercise.
African leaders on Sunday held talks to review an ambitious plan for a conflict-free Africa as violent unrest escalates in parts of the continent. The Africa Union (AU) adopted in 2013 a plan to silence guns on the continent by the year 2020. Four years later the leaders signed off on a roadmap for practical implementation of the plan. On Sunday, heads of states and governments from across the continent met virtually to assess progress.
The DHL Global Connectedness Index 2020 (GCI) is the first comprehensive assessment of globalization during the spreading COVID-19 pandemic. John Pearson, CEO of DHL Express, said: “Connected supply chains and logistics networks play an essential role in keeping the world running and stabilizing globalization especially at a time of a crisis that spans our globe. This reminds us of the need to stay prepared for any challenge. The recent vaccine breakthrough has put a spotlight on the systemic importance of fast and secure medical logistics dependent on a worldwide interconnected network that effectively ensures international distribution.”
Notwithstanding the Trump administration’s rhetoric, Africa continued to receive roughly $7 billion in annual US aid allocations in its first three years. US-Africa trade fell to approximately $41 billion in 2018, down from a high of $100 billion in 2008. On the whole, African countries have continued to export natural resources, such as petroleum and metals, to the US.
Efforts are under way to increase trade and tourism between India and African countries, including the development of a VIP airport in Zimbabwe, smart cities in African countries, and the establishment of a furniture corridor. According to projections, India-Africa trade could double by 2021 if appropriate steps are taken by sovereign and corporate entities to raise the full benefit of the growth of the two trade partners. President of the Indian Economic Trade Organisation, Dr Asif Iqbal, said it was the right time to reshape this relation.
International Forum on African Leadership: Keynote Speech Delivered by Dr. Akinwumi A. Adesina, AfDB President (East African Business Week)
The negative impacts on economies have been massive. The African Development Bank estimates that Africa’s GDP will decline by $173-236 billion by the end of the year. Africa’s economic growth rate is expected to decline by 3.4%. The world has become more fragile as we all face common existential risks. Our greatest test and task is to build effective partnerships and reinforce leadership to navigate through the pandemic, save as many lives and possible, reverse the trend, and put the world and its economies back on more resilient recovery pathways.
The European Commission has published the report summarising progress made during the latest negotiation round to deepen the existing Economic Partnership Agreement (EPA) with five Eastern and Southern African partners (Comoros, Madagascar, Mauritius, Seychelles and Zimbabwe). The third round of negotiations was held virtually from 24 to 27 November 2020. The partners made progress on the five issues already discussed in the first two rounds, namely customs and trade facilitation, technical barriers to trade, food safety and plant and animal health standards, rules of origin and agriculture.
The British Ambassador to Egypt, Sir Geoffrey Adams, today signed an agreement with Egypt’s Assistant Foreign Minister for Europe, Badr Abdelatty to strengthen political and trade ties between the two countries. The agreement will allow British businesses and consumers to benefit from continued preferential access to the market after the end of the transition period – which will help boost vital trade and investment. The agreement will provide tariff-free trade on industrial products, as well as liberalisation of trade in agriculture, agri-foods and fisheries which will make trade easier and deliver significant savings to businesses in both the UK and Egypt.
The Africa Infodemic Response Alliance (AIRA), brings together 13 international and regional organizations, together with fact-checking groups which have expertise in data and behavioural science, epidemiology, research, digital health and communications. Dr Matshidiso Moeti, WHO Regional Director for Africa, said the Alliance has the unique reach, knowledge and skills to help halt the impact of dangerous misinformation.
Making Industrialization in Africa Sustainable (United Nations)
Africa remains the world’s least industrialized region, with only one country on the entire continent, South Africa, currently categorized as industrialized. There is general agreement that this has to change, and I believe it can. There needs to be a fundamental shift in the structure of the economies of African nations. Industry, especially manufacturing, will have to account for a far greater share of national investment, output and trade.
The status of Britain’s relationship with the European Union following the end of the transition period on 31 December 2020 remains uncertain. However, one thing is certain – change is coming. Unless a comprehensive trade deal is struck at the last minute, the UK will cease to trade with African countries under the terms of the existing arrangements in place between them and the EU and will revert to trading on WTO terms. For some African countries, agreement has been reached to “roll over” the terms of existing EU agreements such that they apply on a bilateral basis with the UK. For others, the terms on which they will trade with the UK in the long term remains to be finalised.
Trade and Commerce in West Africa and How it Influences IP Rights (IPWatchdog.com)
To do business in Africa, it is important to understand how African countries conduct trade and commerce among themselves and with the rest of the world. Specifically, IP right holders navigating the continent would be better served by an informed economic roadmap into the continent. A proper understanding of the business terrain and IP regimes becomes important for global brands looking to pitch their tent in Africa.
ICC and Africa investor launch global eTrade partnership to digitise five million SMEs in Africa (International Chamber of Commerce)
Announced at the second Africa investor Global Trade Organization Leaders’ Summit by ICC Secretary General John W.H. Denton AO and Hubert Danso, Chairman of Africa investor, the campaign will accelerate the digitisation and intra African and global market access for millions of African SMEs, in support of the African Continental Free Trade Area (AfCFTA). ICC and Africa investor will mobilise a worldwide network of multinational companies, African Corporates, chambers of commerce, media organisations and academic institutions, to provide market access, tools and training programs to digitise SMEs in Africa.
UNIDO paper focuses on factors driving successful industrialization (Modern Diplomacy)
More than 32 million of the world’s poorest people face being pulled back into extreme poverty because of COVID-19, leading UN economists said on Thursday, highlighting data showing that the pandemic is likely to cause the worst economic crisis in decades among least developed countries (LDCs). “The COVID crisis is leading LDCs to their worst economic crisis in 30 years, with per capita GDP (Gross Domestic Product) for the group expected to fall by 2.6 per cent this year ,” said Mukhisa Kituyi, UNCTAD Secretary-General, during a virtual press conference. “We project that absolute poverty indices will be expand by 32 million, and extreme poverty rates in these countries will rise from 32.5 per cent to 35.7 in the current year.”