tralac Daily News
African Continental Free Trade Area Awareness Workshop Goes to Limpopo (The Department of Trade, Industry and Competition)
The Limpopo private sector will be exposed to export opportunities that are presented by the African Continental Free Trade Area (AfCFTA). This will happen during the Limpopo leg of the awareness workshop on the implementation of the African Continental Free Trade Area (AfCFTA) Agreement.
This is part of a series of workshops that the department is rolling out throughout the country from May-July 2023. The inaugural workshop took place in KwaZulu-Natal last week and was a success. Businesspeople who attended the KZN session welcomed the progress and benefits that the AfCFTA will afford their respective businesses once implemented.
According to the Chief Director of Africa Multilateral Economic Relations at the dtic, Mr Sandile Tyini, the workshop seeks to communicate and engage with the private sector, Small and Medium Enterprises (SMEs), as well as women and youth-owned export ready businesses on the status of the implementation of the AfCFTA, including opportunities for South African companies to participate in preferential trade beyond the Southern African region.
“The six sector master plans targeted for these workshops are steel and metal fabrication; agriculture and agro-processing; retail-clothing, textiles, footwear and leather (R-CTFL) value chain; automotive industry; sugar value chain; and forestry. Limpopo workshop will focus on agriculture and agro-processing; sugar value chain; forestry; as well as retail-clothing, textiles, footwear and leather (R-CTFL) value chain,” adds Tyini.
Mozambique must submit its tariff offer to the African Continental Free Trade Area Secretariat (AfCFTA) by June of the current year. The tariff offer was ratified in 2022 by the Mozambican parliament, the Assembly of the Republic.
According to the Minister of Industry and Trade, Silvino Moreno, who was addressing the press during the launch of Africa Week Celebrations, the tariff offer is compulsory for Mozambique’s effective adherence to the continental free market.
“This document contains relevant information about the products that Mozambique will place in the continental market and those that will be free from customs tariffs. The work is concluded and we will present our tariff offer to the AfCFTA by June 30’, the minister said.
“We have a major agricultural capacity. We can offer cashew nuts, cotton and other products that are currently exported to Europe and Asia’, he said, adding that the country has a lengthy coastline, ideal for offering logistical services to some countries that do not have access to the sea.
After the tariff offer submission, he explained, there will follow the disclosure of the national private sector commitments, since Mozambican companies are the main actors of the market.
AfCFTA reviews opportunities in four products (Tanzania Daily News)
THE African Continental Free Trade Area (AfCFTA) is currently reviewing the existing opportunities in value chains of cotton, meat, coffee and cereals across the continent to understand how they contribute to intra-African trade. The four products are main cash streams in Tanzania.
AfCFTA SG said that the organisation is undertaking a review of the opportunities in those value chains of the four crops to help the member states to understand the full potentials of the produce in contributing to intra-African trade and the broader AfCFTA objectives.
“This is part of our collective efforts to create a policy environment for boosting regional investment in agricultural value chains for enhanced intra African trade in agricultural commodities and services and creating a new business dynamic in the agriculture trade arena,” the Secretary- General stressed.
According to the Food and Agriculture Organisation (2019), sub-Saharan Africa’s food import bill was 48.7 billion US dollars in 2019 compared to 46.9 billion US dollars in 2018.
The food import bill for the whole of Africa was about 80 billion US dollars per year in 2015–2017. From 2020 to 2022, the bill per year increased to 84 billion US dollars while intra Africa trade in agricultural food products was 11.4 billion US dollars, representing only 14 per cent of value of agricultural food products imported by Africa from other parts of the world.
“There is, therefore, an imperative need to accelerate agricultural production to reduce the food import bills, revive the rural economies, slow down rural to urban migration, expand foreign exchange earnings and create jobs, especially for young Africans and women,” he said.
USTR Releases Summaries from U.S.-Kenya Strategic Trade and Investment Partnership Negotiations (United States Trade Representative)
Consistent with the Biden-Harris Administration’s commitment to the highest levels of transparency in trade agreement negotiations, the Office of the United States Trade Representative (USTR) today released summaries of texts proposed by the U.S. side during the first negotiating round of the United States-Kenya Strategic Trade and Investment Partnership (STIP), which was held in Nairobi, Kenya from April 17-20, 2023.
The goal of the Partnership is to increase investment; promote sustainable and inclusive economic growth; benefit workers, consumers, and businesses (including micro-, small-, and medium-sized enterprises); and support African regional economic integration. The summaries detail the negotiating proposals from the U.S. side for the following chapters: agriculture; anticorruption; micro, small, and medium-sized enterprises; and services domestic regulation.
Buhari: Border Closure Aimed at Stimulating Local Consumption (This Day Live)
President Muhammadu Buhari, yesterday insisted that his 2019 closure of the country’s land borders was due to his administration’s conscious efforts to encourage Nigerians to eat what they produce locally, particularly the rice commodity.
Speaking while inaugurating the new Administrative Headquarters of the Nigeria Customs Service (NCS), in Maitama, Abuja, he claimed the border closure was consequently appreciated by Nigerians – apparently due to the revolution in local rice production which was occasioned by the positive impact of the Central Bank of Nigeria’s (CBN) Anchor Borrowers’ Programme (ABP) which provides unprecedented financing to smallholder farmers.
Buhari said he closed the borders deliberately to check rice smuggling from neighbouring countries – a situation which grossly undermined Nigeria’s food security agenda and put the economy at risk.
Morocco’s trade deficit widened by 2.6% to 91.3 billion dirhams ($9.13 billion) in the first four months of this year despite a fall in some commodity prices, data from the foreign exchange regulator showed. Imports rose by 3.2% from the prior-year figure to 237 billion dirhams, despite a fall in some commodity prices that lowered the energy bill by 1.7% to 43 billion dirhams, according to the data. Exports meanwhile increased by 3.6% to 145.7 billion dirhams, the regulator said in its monthly report, led by the automotive sector where growing demand drove a 40% increase to 45 billion dirhams of exports.
African trade and integration
Ecobank Launches Single Market Trade Hub (Africa Global Funds)
Ecobank Group has unveiled its Ecobank Single Market Trade Hub with over 300 businesses from 22 countries having signed onto the digital platform so far. The Trade Hub connects traders across Africa, within the 1.4 billion people single market framework of the African Continental Free Trade Area (AfCFTA). The Ecobank Single Market Trade Hub is a digital platform, which serves as an exchange and information repository, designed to respond to the evolving trading needs of SMEs and corporates within Africa’s single market.
The Trade Hub reduces the asymmetry in trade information and in this connection, leverages Ecobank’s wide client base and network advantage, through its presence in 35 African markets.
Jeremy Awori, CEO, Ecobank Group, said: “AfCFTA has created an immense opportunity for African businesses. As the pan-African bank with the most extensive coverage of Africa, Ecobank is perfectly placed to provide trade, information and payment solutions to support SMEs and corporates seeking to capitalize on the single market.”
AfCFTA ‘will fail to reach its potential’ unless governments act (Supply Management)
Lobby group the African Business Council (AfBC) has called for the continent’s governments to ensure that 40% of public-sector contracts go to African companies rather than overseas competitors.
AfBC president Amany Asfour said the implementation of the African Continental Free Trade Area (AfCFTA) agreement would depend on the continent growing its private sector. Asfour urged the region’s governments to push for legislation in their respective parliaments that would prioritise African businesses in public-sector procurement. Her remarks came at a workshop titled “Accelerating the African Continental Free Trade Area: The Strategic Significance of the Pan-African Parliament”, organised by the Pan-African Parliament to help accelerate the implementation of the agreement.
Governments also need to build the capacity of their domestic industries in areas such as pharmaceuticals or garments to ensure suppliers are available within the continent, Asfour added. It is urgent to ensure that Africa has manufacturing industries to leverage the continent’s mineral wealth, she said.
Nigeria’s first private licensed commodities bourse plans to open offices in seven new African markets as it looks to take advantage of growing trade across the continent.
AFEX Commodities Exchange will expand to Ivory Coast this year and Ghana in 2024, before setting up in Benin, Togo, Tanzania, Ethiopia and Zambia, Chief Executive Officer Ayodeji Balogun said in a telephone interview. Founded in 2014, the firm already trades in nine commodities — including corn, wheat, sorghum and cocoa — in Nigeria, Kenya and Uganda.
Russia’s invasion of Ukraine has curbed shipments of essential food commodities to Africa, compounding obstacles to trade. AFEX plans to raise 30 billion naira ($65 million) of debt this year to help fund an expansion that includes boosting storage capacity to 1 million tons by 2025, obtaining more commodities exchange licenses, while adding gold and derivatives to its trading portfolio, the CEO said.
The elimination of trade barriers under the African Continental Free Trade Area, will “unlock significant value” in AFEX’s spot and exchange traded contracts, fixed income products and derivatives, according to Balogun. Daily transactions currently total about 2 billion naira.
SADC Development Finance network forum set for Swakopmund (Namibia Economist)
Local development finance institutions (DFI), namely, Agribank, Development Bank of Namibia, Environmental Investment Fund of Namibia, and the National Housing Enterprise, are set to host the 2023 SADC-DFIs network forum meetings, under the SADC Development Finance Resource Centre (SADC-DFRC).
The engagements are scheduled to be held from 6 to 9 June 2023, in Swakopmund, under the theme “Balancing DFI developmental mandate with sustainability.”
The objective of the forum is to discuss and share experiences on how DFIs have been able to mobilise appropriately priced (low-cost) capital to meet their developmental mandates and close existing market gaps, particularly in such sectors as SMMEs and infrastructure development that, due to several factors such as high risk and long project gestation periods, have traditionally been shunned by commercial banks.
Thus, the forum will discuss available resources to DFIs on the domestic and international capital markets, nature, conditions of access, and climate change financing institutions such as the Green Climate Fund among others.
West African Heads of State and ministers affirmed their commitment to accelerate investments and reforms to make fertilizers more accessible and affordable during the high-level roundtable jointly organized by the Togolese government, the World Bank, and the Economic Community of West African States (ECOWAS).
“Without vision, without strategy, fertilizers can quickly turn from a promise of soil restoration to the cause of deterioration,” said the President of the Republic of Togo, Faure Essozimna Gnassingbé. “As we need to find a proper balance, planning and state involvement are essential. I therefore support a regional approach. As exemplified by the roadmap presented today, our vision should primarily be sub-regional.”
During the event, industry leaders and development partners from the Economic Community of West Africa Agricultural Policy (ECOWAP) reaffirmed their commitments to the development of an innovative and integrated approach for sustainable soil fertility management.
Financial technology—fintech—is enhancing and streamlining the ways in which Africans produce food, transact business and build savings, paving the way for more sustainable models of growth, said expert panelists at an event at the African Development Bank’s Annual Meetings.
There was consensus on the need for close collaboration among regulators, development institutions, businesses and investors in order to harness the potential of fintech. Panelists stressed the centrality of data—collecting it and widening access to it—to the fintech transformation. The participants agreed on the need for governments and development partners to be involved in the development of fintech.
The Bank recognizes the key role fintech can play in driving innovation and more inclusive development. The sector is viewed as providing pathways to offer financial services to the unbanked and lowering transaction costs.
The Board of Directors of the African Development Bank Group has approved an equity investment of $20 million in the Africa50 Infrastructure Acceleration Fund I, in support of its target to mobilize private capital for infrastructure across the continent.
The Africa50 Infrastructure Acceleration Fund I is a pan-African infrastructure private equity fund that is mobilizing up to $500 million for investment and value creation in strategic infrastructure sectors. These include power, energy, digital and social infrastructure, transportation, logistics, and water and sanitation.
The mobilization of private capital is critical to closing the infrastructure financing gap in Africa, especially given the limited fiscal space of African governments which currently provide the largest source of infrastructure funding on the continent.
AU, ECA Unveil $2.5m Project to Tackle Migration Barriers within Africa (Ethiopian Monitor)
African Union Commission (AUC) unveiled a joint project aimed at shaping a positive narrative and eliminating barriers to safe migration within the continent. The AUC launched the $2.5 project jointly with the UN Economic Commission for Africa (ECA).
“The majority of Africans migrate within the continent, and hence the need to focus migration initiatives like those in the joint migration project,” ECA’s Deputy Secretary Hanan Morsy noted. In her remarks, Commissioner Cessouma noted “the need to tap on migration potential to drive the continental agenda with respect to its development, transformation and integration.”
The two-year project, entitled ‘International Migration in Africa: Shaping a Positive Narrative and Removing Barriers to Mobility,’ is funded by the government of Italy.
AU Commission, ATAF collaborate on tax mobilisation matters (The Chronicle)
The African Union Commission (AUC) and the African Tax Administration Forum (ATAF) have extended their cooperation by officially signing a Memorandum of Understanding (MoU), which is aimed at amplifying the continent’s voice on global tax engagements.
Commissioner for Economic Development, Trade, Industry, Mining at the AUC, Ambassador Albert Muchanga, and ATAF executive secretary Mr Logan Wort, signed the MoU during the 2nd meeting of the specialised technical committee (STC) on finance, monetary affairs, economic planning and integration sub-committee on tax at the AU Headquarters on Wednesday, 31 May 2023.
The signing of the MoU marks a significant step in strengthening the cooperation on tax policy and improving tax administration – all aimed at mobilising domestic resources in Africa and achieving Agenda 2063. In addition, the two organisations will also work on rolling out the work plans of strategies to combat illicit financial flows (IFFs) and bringing the African voice on tax matters to global discussions.
Equally, Amb Muchanga said the objectives of revenue mobilisation on the continent would be realized with a coordinated effort. As a matter of urgency, ATAF and the AUC will be convening a meeting to discuss the going global tax discussions to inform and update member states on the evolution of the UN Tax Convention and the upcoming OECD Inclusive Framework Meeting in July 2023.
The United Nations Economic Commission for Africa (ECA) has called for an inclusive international tax system and an overhaul of the global financial system as part of a global deal to secure the Sustainable Development Goals (SDGs) and enable African countries to focus their resources on sustainable and inclusive development.
Speaking at a meeting of the Second Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning, and Integration of African Union whose Sub-Committee on Tax and Illicit Financial Flows is in session, Acting Executive Secretary Antonio Pedro made this call while highlighting the challenges facing African countries in generating domestic resources for economic, social, and environmental investment. According to Pedro, “the fiscal deficit in Africa is estimated at 5% of GDP in 2022 and expected to remain higher than pre-pandemic levels.”
Pedro stressed the need to raise additional resources as African countries face multi-faceted challenges, adding that a double-digit growth rate is needed to rescue the SDGs and accelerate the implementation of Agenda 2063. However, the question remains, where does this growth rate come from?
The BRICS group of emerging markets is ramping up its bid for greater global influence and to challenge the US, sensing a moment to capitalize on a splintering world order to build out its ranks beyond Brazil, Russia, India, China and South Africa.
Foreign ministers from BRICS nations meeting over two days in Cape Town starting Thursday will be joined by counterparts from countries including Saudi Arabia, the United Arab Emirates, Egypt and Kazakhstan. On the agenda is expansion, with as many as 19 countries aspiring to join, and the potential establishment of a common currency.
“BRICS has acquired a very important stature in the world, with many countries across various continents of our world seeking to be part of it,” South African President Cyril Ramaphosa told lawmakers in Cape Town on Wednesday. Naledi Pandor, the foreign minister and meeting host, said last month the bloc could be “transformative,” representing those nations “that wish to play a role in world affairs, ensuring benefit to the Global South.”
High-growth emerging trade corridors set to outpace west, Standard Chartered finds (Global Trade Review)
Trade corridors in Africa, Asia and the Middle East are expected to grow faster than the global average, as momentum moves away from mature western corridors and high-growth routes emerge, research finds.
Exports from the three regions are tipped to grow from US$9tn in 2021 to US$14.4tn by 2030, outpacing global trade growth by nearly 4%, according to a paper published today by Standard Chartered.
Rapid industrialisation is set to establish strong export markets in South and South East Asia, while growing demand, stronger purchasing power and population growth will drive demand for imports across Africa, Asia and the Middle East, it says.
“International trade is projected to move away from the west, shifting southward and outward,” the London-headquartered lender says.
Other drivers for trade growth include the Regional Comprehensive Economic Partnership, a 15-member agreement that UN researchers believe will redirect trade away from markets in the Americas and Europe, as well as the impact of the African Continental Free Trade Area.
World trade can still drive prosperity (IMF Finance & Development)
Rising from the ashes of three disastrous decades of deglobalization, extremism, and world war, our two institutions were built on the idea that thriving international trade goes hand in hand with global prosperity and stability. On balance, the post–World War II record has been impressive. Today fewer than 1 in 10 of the world’s people are poor, a fourfold reduction since 1990, as low- and middle-income countries have doubled their share of global trade.
Yet the tide is turning against economic interdependence and international trade. Trade restrictions and subsidies increased after the global financial crisis, and tensions escalated further as governments responded to the pandemic and Russia’s war in Ukraine by scrambling to secure strategic supply chains and rushing into trade-distorting policies. Taken too far, these measures may open the door to alliance-oriented policies that reduce economic efficiency and fragment the global trading system. They could backfire if short supply chains end up more vulnerable to localized shocks. Foreign direct investment is already increasingly concentrated among geopolitically aligned countries.
“Strengthening the productive capacity in LDCs is an important priority for the international community. It has been recognized in the Doha Programme of Action for LDCs for the next decade,” said Ambassador Erik Brøgger Rasmussen, chair of the LDC Sub-Committee. The purpose of the meeting, he added, is to “look at some of the ongoing efforts aimed at strengthening productive capacity in LDCs and how some of the good practices can be scaled up.”
Supporting economic diversification and strengthening trade institutions in LDCs featured prominently in the discussions, with several speakers stressing that trade policy and trade facilitation reforms are among the private sector’s top recommendations.