Established in 2018, the African Continental Free Trade Area (AfCFTA) represents perhaps Africa’s biggest opportunity for the next few decades in its battle against poverty of all forms; energy and infrastructure included. Against the backdrop of the tens of millions of Africans that have been plunged into extreme poverty by the onslaught of the covid-19 Pandemic, a strong case must be made for a speedy implementation of the African Continental Free Trade Area. It is projected that under the AfCFTA, extreme poverty will significantly decline across the continent. West Africa, for instance, would witness the biggest decline in the number of people living in extreme poverty; namely a decline of approximately 12 million people, which is more than a third of the total for all of Africa. But beyond extreme poverty eradication, it’s about time that the true economic might of Africa is realised through intra-African trade. Compared with Asia and Europe with 59% and 68% intra-continental trade, only 17% of exports from African countries are intra-continental (World Economic Forum), due to age-long tariff and non-tariff barriers, which the AfCFTA is essentially established to eliminate. The fact that intra-African trade constitutes only about 2% of global trade means there are significant gains to be realised if the AfCFTA is properly implemented. A continent that controls vast resources and a 1.2 billion-strong consumer market should be an economic no-brainer of a success, especially considering its young burgeoning and vibrant population. The African socio-economic and political construct under the AfCFTA dispensation must...

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum. About the author: Ratnakar Adhikari, Executive Director, Enhanced Integrated Framework (EIF) & Taffere Tesfachew, Acting Managing Director, UN Technology Bank for Least Developed Countries Limited use of technology is inhibiting LDCs’ path towards structural transformation. These countries can implement measures in several areas to build their technological capacity. Innovative approaches to resource mobilization should be explored to fund such transition. Structural transformation is the process of moving resources from low productivity to higher productivity and skill-intensive sectors, thereby setting development and economic catch-up into motion. While many countries have achieved structural transformation in a matter of decades, the least developed countries (LDCs) have been notoriously slow in this respect. One of the factors for this lack of structural transformation is LDCs’ overwhelming dependence on commodities for production and exports. According to the United Nations Conference on Trade and Development’s Commodities and Development Report 2021, over 75% of African LDCs depend on commodity production for over half of their export earnings, though Asian LDCs have a relatively diversified export basket. The report also suggests that it is extremely challenging to move away from the trap of commodity dependence and attain structural transformation. Fortunately, a combination of technology and global integration can help countries on this path. When it comes to technological advancement and its effective use, the LDCs are at the lower end of the ladder. According to the World Intellectual Property Organization (WIPO)’s Global Innovation Index 2021, which monitors the state of technological...

Ultimately, though, the only way to defeat poverty and graduate from aid is greatly to increase Foreign Direct Investment (FDI) – of which there is a vast potential reservoir in the world looking for the right destination, writes Peter Fabricius from the Institute for Security Studies (ISS). Ultimately, though, the only way to defeat poverty and graduate from aid is greatly to increase Foreign Direct Investment (FDI) – of which there is a vast potential reservoir in the world looking for the right destination, writes Peter Fabricius from the Institute for Security Studies (ISS). Aid remains among the most important elements of the relationship between the developed world and Africa’s least developed countries (LDCs) in particular. Africa has received more aid than any other region, an accumulated total of more than US$2,4 trillion between 1960 and 2018, according to Jakkie Cilliers in his book The Future of Africa. Yet many observers and analysts believe there has been precious little to show for it. In her 2009 book Dead Aid; Why Aid Makes Things Worse and How There is an Another Way for Africa, the Zambian economist Dambisa Moyo, asked why, despite such large aid, most sub-Saharan countries still “flounder in a seemingly never-ending cycle of corruption, disease, poverty, and aid-dependency.” Her answer was that aid is inherently bad because it creates dependency by removing much of the incentive for African countries to fend for themselves – for example by improving their tax collection systems to earn their own government revenue. It is mostly paid...

Vice President Salous Chilima on Tuesday addressed the 21st Common Market for the Eastern and Southern Africa (Comesa) summit in Egypt with a call for the regional block to move swiftly in adopting digitalisation and developing economic recovery plans following the devastation of the Covid pandemic. Chilima—who during the Sadc Summit in Lilongwe urged member states to embrace digitilisation and e-government—is representing President Lazarus Chakwera at the summit. Advertisement He said there was urgent need for Comesa to develop a robust economic recovery plan in order to build back economies because soon Covid will no longer be an excuse to people. “The Covid pandemic has reversed some of the gains that we had achieved over years in our respective countries. We, as Malawi, also have had our fair share of the negative impact that the pandemic caused on the economy,” he said. Chilima said on regional level, the value of Comesa’s total exports to the world decreased by 27 percent from $123.4 billion in 2019 to $90.3 billion in 2020, while the value of Intra-Comesa total exports declined by 11 percent from $10.9 billion in 2019 to $9.7 billion in 2020. Advertisement “What is more worrying is that the uptake of vaccines in the region is currently less than three percent. Therefore, as a response, we need to develop a robust economic recovery plan. “We need to build back. We need to build resilience. Soon Covid 19 will no longer be an excuse to our people. As a regional group,...

Industrialisation is crucial for Africa’s development and the implementation of the African Continental Free Trade Area (AfCFTA) could provide crucial impetus in the coming years. Major challenges and opportunities for Africa’s transformation model present themselves continuously. African countries have responded to Covid-19 by resorting increasingly to digital solutions but to a lesser extent with greener, fiscal measures. Prospects for African manufacturing at this year’s Africa Industrialisation Day appear brighter than last year when Africa was in the middle of the largest economic crisis for decades. While economic recovery is still slow, appropriate support linked to the implementation of the AfCFTA can boost manufacturing prospects significantly. Progress in Africa’s manufacturing performance In a paper published earlier this year, Carlos Lopes and I argued that discussions around premature deindustrialisation (a decline in the contribution of manufacturing to GDP ahead of its normal development path) were in fact premature in relation to many African countries. Taking recent World Bank World Development Indicators (WDI) data for the subset for sub-Saharan African countries, the share of manufacturing in GDP in 2020 was 12%, the same as it was in 2002, but up from as low as 9.2% in 2010. Despite the downturn in 2020, annual growth in real manufacturing value added was 3.3% over the decade to 2020 (up from 3% in the previous decade), significantly better than the 2.8% (and 1.9% respectively) annual growth for the world as a whole. Some countries have really transformed their industrial sector in recent years. Morocco surpassed South...

The Secretary General of the African Organisation for Standardisation (ARSO), Dr Hermogene Nsengimana, has called on African governments to strengthen their standards regulation agencies to position them as the springboard for economic development. He said standards played a critical role in the competitiveness of businesses and must be prioritised while the continent implemented the African Continental Free Trade Area (AfCFTA) agreement to reap the benefits of the world's biggest trade bloc. Dr Nsengimana made the call at the 65th meeting of the ARSO Council in Accra last Wednesday. The ARSO Council members, who are heads of the standards organisations of member states, have met in Accra to identify a means of facilitating seamless intra-Africa trade through harmonised infrastructure. The meeting is taking place amidst calls to accelerate the harmonisation of standards in the region to achieve the objectives of the AfCFTA. It is being held under the theme: “The beginning of trade among African countries under the AfCFTA Agreement: Boosting intra-African trade within the African single market through ‘One Standard–One Test–One Certificate–Accepted Everywhere”. Harmonisation In order to reap the benefits of the free trade agreement, Dr Nsengimana said the ease of doing business in the region must be deepened by eliminating trade barriers and harmonising standards. “When we talk about one standard, we are talking about harmonisation and we are looking at equal collaboration or mutual recognition arrangement so that we can help our private sector to trade from Ghana to Kenya or South Africa with one standard so that...

The World Trade Organization's (WTO) forthcoming 12th Ministerial Conference (MC12), to be held from 30 November to 3 December, comes at a time when the COVID-19 pandemic has disrupted human and economic activities and heightened the significance of trade-related responses to accompany other global initiatives. Enhancing the participation of developing countries, including Commonwealth least developed countries (LDCs), in the multilateral trading system is indispensable because trade is an essential tool for growth and development. The WTO LDC Group, which includes eleven of the thirteen Commonwealth LDCs, have prepared and advanced proposals on their priorities and expected outcomes at MC12.[1] The below analysis by Colin Zhuawu, Economic Adviser (Multilateral Trade), Trade, Oceans and Natural Resources Directorate of the Commonwealth Secretariat, assesses the priorities of Commonwealth LDCs at MC12 and suggests possible strategies to pursue a favourable outcome. Multilateral Negotiating Issues Agriculture Discussions on Agriculture focus on several disciplines intended to correct trade distortions in agricultural trade, encompassing domestic support, export competition and market access. The discussions provide an opportunity for developing and least developed countries to address their food security needs through a Special Safeguard Mechanism and provision on Public Stockholding (PSH). Reductions in trade distorting domestic support by the world's largest subsidisers is imperative to improve access to markets for farmers in Commonwealth LDCs. Due to the highly complex and technical nature of deliberations on domestic support, a realistic outcome at MC12 would be agreement to initiate a specific work programme post-MC12 on the necessary reductions. However, Commonwealth LDCs might...

With a landmass bigger than India, China, the US and Europe combined, few doubt the scale of the African continent and its resources. However, until recently, only some have seen it as the growth market that it is fast becoming. Africa has grown its economy by five per cent annually over the last decade. With its population steadily growing towards two billion, the continent is projected to have the largest workforce by 2040. Also, with a collective GDP of $2.6 trillion by 2020 and $1.4 trillion of consumer spending, many see the impact of around 500m new middle-class consumers. After witnessing its worst recession in half a century in 2020, Africa’s economy is forecast to grow at a healthy pace of 3.8 per cent in 2021, driven by rising global demand as restrictions are eased, untapped market opportunities, a rebound in commodity prices and a rise in oil prices. While Africa’s vastness and diversity allow for entrepreneurship to flourish across communities, it also poses challenges to creating universal solutions for issues such as poverty and food security, because each country has its unique capacity for innovation. For instance, while Ethiopia, Uganda, Ivory Coast, Egypt, Ghana, Rwanda and Kenya ranked in the top 10 fastest growing economies worldwide in 2020, the continent still holds some of the poorest nations in the world. African economies are not the same in design. We have the oil exporters: Nigeria, Angola, Libya and Algeria; and the more diversified economies found in Egypt, South Africa and Morocco. Then...

Malawi’s leading commercial banker, Stock Exchange listed FDH Bank impressed the international stage and left an indelible mark at this year’s Intra-African Trade Fair (IATF) in Durban, South Africa. FDH Plc, which is the only Malawian bank to have participated at the 2021, mounted a business stand at one of the continent’s biggest business trade fairs to showcase its business packages. Chippi Saka, a Malawian based in South Africa and working as a trade and market officer in the department of economic integration at the African Union Development Agency (AUDA) formerly NEPAD. NEPAD said he has been impressed by FDH bank’s level of excellence and commitment to quality banking services. Speaking in an interview with Nyasa Times from his base in one of the busiest cities on the African continent, Johannesburg, Saka who is also a qualified accountant, said: “FDH Bank is a very serious and forward-thinking bank and I am impressed with their professional demeanour at Africa Intra-African Trade Fair. “I have in the past four days been visiting the Malawi stand at the Intra-African Trade Fair. FDH bank is amazingly impressive – It is the most ‘impressive’ bank and the only bank from my land of birth showcasing their products and services.” Saka said FDH Bank is ticking all the right boxes in its quest to becoming an international bank adding that all its services are people-centred. Said Saka: “FDH Bank is meeting people’s needs. FDH is selling itself vigorously to world stage. FDH is repositioning. FDH is...

  With the African Continental Free Trade Area (AfCFTA) poised to generate potential gains of up to $450 billion according to the World Bank, the International Trade Centre (ITC) and the Organization of Women in International Trade (OWIT) in Nairobi, in collaboration with OWIT Nigeria and OWIT Zimbabwe, are partnering to support African women entrepreneurs to participate in intra-regional trade. Speaking during the Africa Women Trade Conference organized by the two organizations on November 25 and 26, Aissatou Diallo, ITC Senior Coordinator for the AfCFTA and Least Developed Countries, said that trade under the AfCFTA would drive larger gains in earnings for businesswomen. Themed ‘Empowering Women in Intra-Africa Trade’, the conference encourages women entrepreneurs to trade cross continentally, taking advantage of the AfCFTA’s enormous potential for trade within the regional and continental markets. The conference further focuses on Africa’s investment opportunities while creating an opportunity for women entrepreneurs and business leaders to meet with investors. Supported by ITC’s One Trade Africa programme, the two-day hybrid event, with 200 participants on-site and 1,000 joining virtually, brings together traders, government agencies, financial institutions, investors, small businesses and local eco-system partners. Experts attending the conference say it is critical to establish what the AfCFTA means for women in terms of their participation in cross-border trade, value chains and public procurement from the onset. They also underscore women and youth are key stakeholders in continental economic development, as Africa’s informal sector accounts for 85% of the continent’s total economic activity; and while women account for 90% of the labour force in the informal...