The moment for Africa to become a serious player in global value chains is now or never. With solid political momentum behind the Africa Continental Free Trade Area (AfCFTA), we have a window of opportunity to improve regional value chains and further upgrade into Global Value Chains (GVCs). Launched in January 2021, the AfCFTA was positioned as the trade agreement to transform the economic trajectory of Africa and position the continent as a force within the Globe. The Free Trade Area brings together 55 countries with a population of over 1.3 billion, a combined gross domestic product valued at $34 trillion and is estimated to bring over 30 million people out of poverty. Since its launch, the AfCFTA Secretariat has made progress, the most recent being the launch of the Rules of Origin manual and e-tariff book in July 2022. Africa barely trades with itself currently. According to an UNCTAD report, Africa interregional trade currently stands at 15 percent compared to 47 percent in America, 61 percent in Asia, and 67 percent in Europe. Africa and Asia are the only continents with rising interregional trade since 2008, providing us with an opportunity to turn the tide. The AfCFTA can accelerate this growth by developing regional value chains as a foundation for Africa’s participation in Global Value Chains. Africa’s integration into manufacturing value chains is also dominated by export of primary products with only 1.9 percent of global manufacturing taking place in the continent. The Economic Complexity Index (ECI), an indicator...

The COVID-19 pandemic is disrupting Africa’s development trajectory. It is exacting a substantial socio-economic toll and putting the survival of half of the continent’s micro, small and medium-sized enterprises (MSMEs) at risk. Four in five African businesses are witnessing a dramatic reduction in sales. As African countries restart their economies and phase out COVID-19 restrictions, the ripple effects of the Ukraine crisis increase daily. The effects are particularly acute in terms of food security, given the continent’s reliance on food imports from the region of conflict. In addition, the rising cost of fertilizers and the impact of climate change are exacerbating food shortages. These shocks have slowed progress towards achieving SDG2, which is zero hunger by 2030. A 2021 joint publication by FAO, the United Nations Economic Commission for Africa (UNECA), and the African Union titled, Africa: Regional Overview of Food Security and Nutrition indicated that over one-fifth of the continent’s population faced hunger in 2020. That is about 281.6 million people—46.3 million more than the figure for 2019. Due to the current harsh economic realities in countries, the International Monetary Fund is encouraging governments worldwide to subsidize the cost of food and energy for their poor. Such a social intervention presents a huge fiscal challenge for many African countries. What then is the solution? An effective solution is to boost intra-African trade, which has the potential to pave the way to food security. Africa has enough food to ensure its citizens do not face hunger; however, the challenge is...

The African Continental Free Trade Area (AfCFTA) agreement which was approved in 2021, provides a unique opportunity to boost growth, cut poverty, and reduce Africa’s dependence on the boom-and-bust commodity cycle. The agreement further seeks greater regional economic integration and a more significant contribution by African countries to global trade. According to the 2020 report by the World Bank on Making the Most of the African Continental Free Trade Area: Leveraging Trade and Foreign Direct Investment to Boost Growth and Reduce Poverty, AfCFTA will cover 55 member countries, with a continental population of 1.3 billion people and a combined annual GDP of $3.4 trillion. When fully implemented, it is estimated the agreement could boost the region’s income by $450 billion annually and provide new opportunities, including trade, agriculture, manufacturing, e-commerce, cultural and transport sectors. Trade In particular, Annex 4 to the AfCFTA treaty aims to simplify and harmonize international trade procedures and logistics to expedite the processes of importation, exportation and transit; and expedite the movement, clearance and release of goods, including goods in transit across borders within State Parties. This simplification is important for Africa to maximize potential gains from the AfCFTA, which is made clear by looking at the high trade costs of crossing borders on the continent. As the map below illustrates, many African countries have borders ranking at the top of the most restrictive in the world as measured by the costs of cross-border trade.   Transport For historic reasons, bilateral and regional trade in Africa has been hampered...

Digitalization brings new opportunities in trade and creates the potential to underpin resilience in times of crisis. The digital transformation of African customs and borders could improve efficiencies in processes and yield trade gains on the continent of US$20 billion a year. With digital trade in place, pre-existing bottlenecks in infrastructure can be tackled, efficiencies can be leveraged, and innovative solutions can be harnessed. However, countries in Africa vary greatly in their readiness for digital trade.  In African countries where economic resilience must be fostered, jobs must be created and, entrepreneurship skills must be facilitated, digital trade must be in full swing.  How digital automation is easing the flow of trade  Thanks to technological advances, importing and exporting goods and services in Nigeria has become easier thanks to the rise of online international trade administration portals. These online portals automate the experience for many stakeholders, including customs officials, businesses importing finished goods and raw materials for manufacturing, and those exporting their goods across the globe.  Blockchain technology, Artificial Intelligence (AI), state-of-the-art payment solutions, fraud detection and prevention, and warehouse management solutions are helping to increase the ease of trade, streamlining border management, and identifying and potentially overcoming issues that impact timeframes, logistics and transportation.  Using a platform of this type, such as Webb Fontaine’s Single Window for Trade, provides clients with a wide spectrum of up-to-the-minute information, including trade formalities, import and export procedures, latest tariff codes and rates, as well as fee simulation features. Businesses can fill in pre-arrival...

Trade by the SA Customs Union (SACU) within the African Continental Free Trade Area (AfCFTA) is expected to start in a few months. Read original article

Standard Bank Africa says Namibia finds it easier to trade in Africa than the rest of the world. According to the Standard Bank Trade Barometer report for June 2022, Namibia had the highest score of 27% compared to 10 other countries in the “very easy” section in Africa against 13% for the rest of the world. However, it is not only Namibia that is struggling to penetrate international markets, as Africa’s largest economy Nigeria also finds it most difficult to trade with the rest of the world, scoring 43% in that category. “This Africa Trade Barometer report is one of the most comprehensive research reports on the state of trade on the African continent as experienced on the ground by real African businesses,” said Bill Blackie, the Standard Bank’s Business and Commercial Clients division Chief Executive. The report offers a comparative view of the enablers and challenges to facilitating trade across 10 key African markets, he added. Data were collected principally from the World Bank, although underlying data sources ranged from the International Monetary Fund and the International Trade Centre to country central banks. According to the report, tariffs are a major obstacle to trade within Africa and the rest of the world, while forex restrictions and controls are seen as less severe obstacles to trading. Notable obstacles to trading in Africa include customs and trade regulations, power outages, and customs requirements (top three obstacles). “In the rest of the world, severe trading obstacles include customs and trade regulations, customs...

Increased intra-African trade is an effective option to pave the way for post-Covid-19 economic recovery and food security. The COVID-19 epidemic threw Africa’s growth trajectory off course. African nations have attempted to unilaterally liberalize trade and participate in free trade and regional integration agreements. Nations launched the AfCFTA as one of the actions made to support more extensive intra-African trade. The sweeping effects of Covid-19  The health and economic implications of the COVID-19 pandemic dramatically raised the number of individuals living in severe poverty in Africa. In 2010, Africa’s extreme poverty threshold was 40.2 per cent, with a poverty level of US$1.90 daily in purchasing power parity, and it had dropped to 34.1 per cent by 2019. Nonetheless, this percentage drop in poverty incidence was insufficient to lower the overall number of poor individuals. Given the growth in population size, the number of individuals living in severe poverty in Africa grew from 408 million to 442 million between 2010 and 2019. The economic and health implications of the COVID-19 pandemic forced 27 million more people into extreme poverty in Africa in 2020 compared to 2019 and almost 51 million compared to the pre-COVID-19 period. The COVID-19 epidemic threw Africa’s growth trajectory off course. The epidemic had a significant socioeconomic toll, threatening the existence of half of the continent’s micro, small, and medium-sized companies (MSMEs). Four out of every five African enterprises saw a significant drop in revenue. As African nations relaunched their economies and phased away COVID-19 limitations, the repercussions of the Ukraine crisis...

In pursuit of accelerating large-scale trade and business development, a number of African countries have been chosen to begin exchanging goods and services under the the the new African Continental Free Trade Area (AfCFTA). The continental free trade is planned to operate within the framework of the African Union Agenda 2063. The AfCFTA makes trade between African countries easier by providing new export opportunities for African countries’ products and services to trade with each other without tariffs or other hindrances, and thus driving an improved access to the biggest market space and ultimately lead to sustainable economic growth. Now the continental trading is about to operate as a platform for creating and strengthening ties between business communities, it highlights the readiness of the business environment and its priority potential development for the Africa. Under the agreement with partners and shareholders, the African Continental Free Trade Area (AfCFTA) has chosen about eight African countries including Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia that will soon start trading. The move is part of efforts to diversify and increase export among African countries through Export Trading Companies (ETCs) while achieving the continent’s industrialization drive and make it economically self-reliant. Herbert Krapa, Deputy Minister of Trade and Industry (MoTI), said at a seminar to sensitize African countries on the role of ETCs in easing intra-African trade under the AfCFTA in Accra, Ghana, that the Secretariat had launched the AfCFTA Initiative on Guided Trade to translate all the progress on paper into action...

The East African Business Council, COMESA and SADC Business Council have officially launched and formed the African Tripartite Business Council to spearhead the inclusion of private sector policy proposals into the negotiations of African Continental Free Trade Area (AfCFTA) Agreement and the African Tripartite Free Trade Area (TFTA). This is one of the resolutions from the Consultative Meeting of Regional Business Councils on the Implementation of the African Continental Free Trade Area (AfCFTA) Agreement organized by the East African Business Council (EABC) with support from TradeMark Africa (TMA). “The African Tripartite Business Council will put forward joint private sector policy positions to the AfCFTA Secretariat in Ghana and Tripartite Ministerial Council Meetings in order to accelerate the implementation of the Agreements,” said, Mr. John Bosco Kalisa, EABC CEO. Mr. Kalisa called upon the Member States from COMESA, the East African Community (EAC) and the Southern Africa Development Community (SADC) to ratify the Tripartite Free Trade Area to achieve the threshold of 14 ratifications required to enable the Agreement to enter into force. Mr. Dickson Poloji, CEO of COMESA Business Council said, “It is important for the private sector to be knowledgeable of the trade instruments of Rules of Origin, Standards and Dispute Settlement Mechanism under the AfCFTA” He elaborated that the implementation committees of the AfCFTA should be co-chaired by the private sector. On his part, Mr Peter Varndell-CEO, SADC Business Council said “The African Tripartite Business Council will improve coordination and development of positions on AfTCFA policy formulation and...

The African Continental Free Trade Area (AfCFTA) Secretariat has launched an online hub to ease trade on the African continent The AfCFTA Hub is a focal point for national governments, intergovernmental, private, and public organisations It links the parties together to make way for SMEs and startups to drive the success of the African Continental Free Trade Area The African Continental Free Trade Area (AfCFTA) Secretariat has launched an online hub to ease trade on the African continent. The AfCFTA Hub is a focal point for national governments, and intergovernmental, private, and public organisations. It links the parties together to make way for SMEs and startups to drive the success of the African Continental Free Trade Area. The online hub is designed to grow into a single, trusted directory of the services needed to navigate the AfCFTA for small players, thereby making the AfCFTA the most inclusive Free Trade Area in the world. The AfCFTA Hub also powers the “AfCFTA Number”, trusted identity and social score for all SMEs, startups and other AfCFTA players. “It is important to ensure the centrality of SMEs, startups and female entrepreneurs as we strive to build the world’s most inclusive, most innovative and most integrated Single Market,” said Wamkele Mene, Secretary General AfCFTA. Kenya is one of the seven countries that have been selected to start trading under the AfCFTA framework in a pilot phase to test the environmental, legal and trade policy basis for intra-African trade. The AfCFTA Hub platform and ongoing engagements...