tralac Daily News
IMF Executive Board Concludes 2023 Article IV Consultation, Sixth Reviews of the Extended Arrangements Under the EFF and ECF Arrangements, and First Review Under the Resilience and Sustainability Facility Arrangement for Kenya (IMF)
The Kenyan economy remains resilient against a challenging global backdrop even as it recovers from the legacy of the COVID-19 pandemic and the worst multi-season drought over the past two years. The economy expanded by 5.6 percent y/y in the first nine months of 2023, driven by a strong recovery in agriculture which also helped lower both overall and food inflation. Non-agricultural growth, however, slowed amid tighter policies.
The external current account balance has improved as real exchange rate depreciated and imports contracted. Exports and remittances remained resilient. While foreign exchange reserves remain adequate, they declined in the second half of 2023 amid debt service payments and limited external financing inflows.
The near-term outlook is one of continued resilience with growth projected at around 5 percent in 2024 amid ongoing adjustments in the fiscal policy and external accounts. Kenya’s medium-term prospects are positive and could be buttressed by improving competitiveness, inclusivity, and enhancing governance and anti-corruption framework to support a vibrant and market-driven economy.
Forex Crisis: ‘$2.25bn Afreximbank Disbursement Inadequate’ (Leadership News)
The Association of Bureau De Change Operators of Nigeria (ABCON), has stressed that the $2.2 billion released by the African Import Export Bank (Afrexim bank), is not enough to stimulate the market in view of the persistent foreign exchange crisis in the country. National president of ABCON, Aminu Gwadabe, lamented that due to the depreciation in the value of naira, some Nigerians are now keeping their savings in the United States dollars.
According to him, “For now, it’s a difficult situation which is also creating panic in the market because the value of the naira is eroding and because of that, a lot of people prefer to keep their savings in dollars,” he disclosed.
Speaking on the $2.2 billion crude oil prepayment facility, Gwadabe said, “the $2.2billion Afrexim bank crude prepayment facility is a welcome development but I don’t think it’s enough to stimulate the market considering the situation because if we put $2.2billion into the market, we have been seeing demand in the I&E window alone ranging from $150million to $250million daily so, in 10 days, the $2.2billion will be exhausted. Speculators will speculate and we will run it out between 10 to 15 days.”
Zambia plans to build a new rail connection to link a Lake Tanganyika harbor to an existing line that runs to neighboring Tanzania, boosting trade with three other nations that share borders with the world’s longest freshwater lake.
The southern African nation’s Transport and Logistics Ministry asked companies to express interest in financing, building and running the concession that will be about 192 kilometers (119 miles) long. The tracks will connect to the Tanzania Zambia Railway, or Tazara, at Nseluka in northern Zambia and run to Mpulungu harbor on Tanganyika, the ministry said in a statement published Thursday in the state-owned Times of Zambia.
The Republic of Malawi’s accession to the Central Corridor Transport Facilitation Agency (CCTTFA) on 1 December 2023 represents a pivotal moment in enhancing regional trade and connectivity. This momentous event took place during the CCTTFA Extraordinary Inter-state Council of Ministers meeting in Dar es Salaam, Tanzania. The Malawian delegation, spearheaded by the Honourable Jacob Hara, Minister of Transport and Public Works, formally signed the agreement, thereby inducting Malawi as the sixth member state of the Central Corridor.
The Central Corridor, a key multimodal transport network, plays a vital role in linking landlocked countries in the region to the Indian Ocean port of Dar es Salaam. It stands as a cornerstone for promoting trade and development across the continent. With Malawi’s inclusion, the corridor’s reach extends across six nations: Tanzania, Burundi, Rwanda, Uganda, the Democratic Republic of Congo, and now Malawi. Malawi’s strategic decision to join the Central Corridor is expected to significantly boost its access to maritime routes and regional markets.
2023 saw a momentous shift in Africa’s visa landscape, with most countries significantly liberalising their entry requirements. Rwanda and Kenya have joined Gambia, Benin, and Seychelles in offering visa-free access to all African travellers, dismantling a historic barrier to regional integration.
Kenya’s new electronic travel authorisation (ETA) system, launched in January 2024, has already received 10,000 applications. “Processing is smooth,” assures Julius Bitok, head of the immigration department, “with approvals based on individual travel schedules.” Kenya’s ambitious goal? More than doubling tourist arrivals – from 2 million to 5 million annually – thanks to the streamlined entry process. This is reported by The Herald, a TV BRICS partner.
The benefits extend far beyond tourism. As Marie-Laure Akin-Olugbade, Vice President of Regional Development, Integration, and Business Delivery at the African Development Bank Group, states, “Simplified visa regimes not only facilitate travel but also foster trade in goods and services, cross-border investment, and broader prosperity.”
The Southern African Development Community (SADC) Secretariat will be launching the Regional Customs to Business Forum (RCBF) in Johannesburg, South Africa on 19 January 2024 to bolster inclusiveness in policy formulation, collaboration and advocacy in order to advance the implementation of regional cross border solutions and participation in the regional, continental and global economy. This launch resonates with the growing trends to strengthen export-oriented value chains through capacity needs, financing, and optimised technology efficiency within the customs and private sector ecosystem.
The main objective of the Regional Customs to Business Forum (RCBF) is to provide a platform for Customs to Business (C2B) to leverage policy advocacy opportunities within the Region that expedite implementation of Regional trade agreements and address trade facilitation initiatives which support impactive movement of goods across the SADC Region. The Forum aims to inform, advise, identify, discuss, and present options for addressing identified impediments to the flow of goods across borders in the SADC region.
Vice President Kashim Shettima, has implored African leaders to work towards ramping up the total $3.1 trillion Gross Domestic Product (GDP) of countries on the continent, amounting to a paltry three percent of the overall global GDP. According to him, “the total Gross Domestic Product of African countries taken together is barely $3.1 Trillion, which is less than 3% of world GDP”.
He said: “African trade still hovers at 3% of world trade. These indices must be reversed and ramped up. I believe this is one of the key concerns of Africa Economy of Scale. “It must be borne in mind that African economies are still largely primary and basic in nature, with considerable dependencies on the global economy. Most countries on our continent are still known for their export of raw materials, minerals and food crops. African economies understand that we must begin to add value to primary products like cash crops and step up to secondary and tertiary product manufacturing,” the VP stated.
Many African nations are particularly vulnerable to the effects of a fragmented geopolitical environment, and it will require an engaged community of nations to help Africa advance. Trade restrictions have surged, particularly in Africa, impeding the movement of goods and services. This makes it even more difficult for low-income countries to overcome high inflation and interest rates to make progress on poverty reduction. We have to bolster a rules-based, equitable, sustainable, and transparent multilateral trading system, with the World Trade Organization (WTO) at its core, if we want to restore growth and job creation.
Borders between African countries rank among the most restrictive in the world, hindering intra-African trade and investment. The African Continental Free Trade Agreement (AfCFTA) is an important pathway to break these barriers, unlocking the continent’s economic potential by creating a single, continent-wide market that unites 54 countries with a combined population of 1.3 billion and a GDP of $3.4 trillion. This could boost trade and investment, making the continent more attractive for business partners to integrate Africa into regional and global value chains. It can also create millions of jobs for Africa’s growing population, especially its women and youth.
The African Continental Free Trade Area (AfCFTA), is set to introduce a Digital Trade Protocol to further boost Africa‘s economy. This was revealed by Secretary General of the African Continental Free Trade Area (AFCFTA), Wamkele Mene today January 17 at a Wall Street Journal event dubbed ‘Trade’s Transformative Power’. Mr Wamkele also spoke about Africa’s trade evolution.
In his remarks at the Alliance for a Green Revolution in Africa (AGRA) session at the ongoing 2024 Edition of the World Economic Forum Annual Meetings being held from Tuesday, 16th January, to Friday, 19th January, Mr Wamkele Mene said that a major hindrance to intra-African trade is the high tariffs on agricultural products. He stated that the continent’s significant food market, with $50 billion in annual imports, is highly fragmented.
Africa is undergoing profound changes as the region becomes more integrated, accelerated by the AfCFTA – a single market representing 1.7 billion people and $6.7 trillion in consumer and business spending by 2030. The full implementation of the AfCFTA agreement is projected to increase real incomes by 7% or nearly $450 billion.
Projects profiled in this action plan include the mobilization of financing to upgrade infrastructure in the transport and logistics sector, the development and deployment of green technologies in the automotive sector, the expansion of initiatives to move more of the agriculture value chain to the continent, and commitments by pharmaceutical companies on workforce, innovation, finance, policy and inclusivity.
Taken together, these ambitious commitments from leading companies on the continent signal to potential investors that investment in Africa can look forward to a future of boundless innovation and inclusive African prosperity.
Mr Silver Ojakol, Chief of Staff, African Continental Free Trade Area (AfCFTA) Secretariat, has challenged business and political leaders to be intentional in utilising the Continent’s vast natural resources for its development. He noted that for years, Africa’s resources had powered global development at the detriment of the continent and its people, and asked business and political leaders to change the narrative through AfCFTA.
He said this at a press briefing in Accra on Monday, January 15, ahead of the 2024 Africa Prosperity Dialogues, scheduled for January 25 to 27 at Aburi in the Eastern Region. “There is an urgent need for us [Africa] to use our vast natural resources and the demographic advantage for industrialisation, improved infrastructure and energy solutions that will enhance and reduce production cost,” he said.
The Pan African Chamber of Commerce and Industry (PACCI) participated in this week’s "Conference on AfCFTA Implementation Strategies: Towards an AfCFTA Implementation Peer Learning Community," urging greater action on economic diversification and private sector engagement to unlock the full potential of the African Continental Free Trade Agreement (AfCFTA) for Small and Medium-sized Enterprises (SMEs).
While acknowledging the importance of trade and investment liberalization, PACCI stressed that it alone will not be sufficient to ensure significant SME participation in intra-African trade and investment. They emphasized the need for complementary policies fostering economic diversification and supporting entrepreneurship to empower SMEs to take advantage of the AfCFTA.
AfCFTA: Women-led businesses to get 10% subsidised interest rate (The Business & Financial Times)
Women-led businesses in the country interested in exporting under the Africa Continental Free Trade Area (AfCFTA) will be given bank loans at a subsidised interest rate of 10 percent, Ashanti Regional Director, Ministry of Trade and Industry, Mamuda Osman, has said. According to him, this is part of governments effort to support women in business so they can export to the continental market, since the role of women in nation building must not be underestimated.
Delivering a keynote address at the Ghana National Chamber of Commerce/GIZ Trade Hub conference for GNCCI Women in Kumasi, Mr. Mamuda added that there are certain protocols reserved for women which the next Africa Union (AU) meeting will ensure are adopted.
The main objective of the African Continental Free Trade Area is to eliminate trade barriers and boost intra-Africa trade. This column argues that implementing the Trade Facilitation Agreement’s provisions would be a powerful complement to the free trade area’s tariff-reduction agenda. A realistic implementation of TFA measures could reduce time in customs for imports by 2.7 days for exports by 1.7 days. These reductions in time translate into a tariff ad-valorem equivalent reduction in the range 3.6–7% for imports and an 8.1% extra growth for exports.
The ECA Office for North Africa and the Ministry of Foreign Affairs and Senegalese Abroad initiated a workshop on the contribution of migration to development in Africa in Dakar (Senegal) on Wednesday 17 January 2024.
“Migration can be an important pillar for the development of African economies if one can provide a better orientation of expatriates’ remittances towards investments and the financing of development in African countries,” said Khaled Hussein, head of the Sub-regional Initiatives Section at the ECA Office in North Africa. Intra-African migration is a key component of regional integration, hence the need for countries to develop public policies that benefit migrants, their countries of origin and their host countries.
The Future of Growth Report 2024 introduces a multidimensional framework to assess the quality of economic growth across 107 countries globally. It characterizes nations’ economic growth across four dimensions: Innovativeness; Inclusiveness; Sustainability; and Resilience. The data and analysis presented may be used by a wide range of stakeholders to identify areas to improve, trade-offs to resolve or synergies to exploit. While every country has a unique growth pathway shaped by a wide range of circumstantial factors, the report highlights seven distinct “growth pathway archetypes,” with the aim to identify countries most closely related in their growth characteristics and facing similar constraints and opportunities.
Climate change–and efforts to mitigate and adapt to it–will affect global flows of trade and Indonesia’s ability to transition to a more environmentally sustainable economy on its path to become a high-income economy is, therefore, interlinked with trade policy. A crucial challenge lies in harmonizing these with sustained economic growth, yet both goals can be reached. Although trade flows facilitate emissions, they are also a critical part of the solution, including through trade in environmental goods (EGs) and plastic substitutes‒with important economic spillovers.
Deputy Director-General Angela Ellard on 17 January discussed the negotiating priorities for WTO members in the run-up to the 13th Ministerial Conference (MC13) in Abu Dhabi next month and areas where members are considering reform of the WTO at a seminar on the WTO organized by the Washington International Trade Association.
Global foreign direct investment (FDI) defied earlier expectations for 2023, growing by 3% and finishing the year at an estimated $1.37 trillion, according to UNCTAD’s latest Global Investment Trends Monitor published on January 17. However, the report highlights a key nuance – the overall uptick was driven mainly by a handful of European “conduit” economies, such as Luxembourg and the Netherlands, which often act as intermediaries for FDI destined for other nations.
The report’s sectoral analysis for 2023 showed an uptick in project numbers in sectors that rely heavily on global value chains, including automotive, textiles, machinery and electronics. The report raised concerns about the renewable energy sector, which saw a 17% decrease in new international project finance deals and a 10% decline in their value. This marked the first decline since the Paris Agreement in 2015.