By Ahmed Fara In the face of escalating global environmental challenges, African nations are at a pivotal moment. With less than four percent contribution to global greenhouse gas emissions (GHGs), Africa faces the daunting task of balancing economic growth with environmental sustainability. But this is not just a challenge; it's an opportunity for transformation. At the core of this transformation is the shift from traditional, fossil fuel-driven industrialisation to a model that leverages Africa's abundant renewable energy resources and minerals essential for green growth. Kenya, for instance, is leading by example, generating nearly 90 percent of its electricity from renewable sources, according to the Energy and Petroleum Regulatory Authority. Kenya’s case, pundits say, proves that industrialisation doesn't have to follow the pollute-first, clean-up-later pathway. It's a lesson in how environmental conservation and economic development can go hand in hand. The increasing preference for eco-friendly products in export markets affects African traders. For example, the environmental impact of airfreighting fresh produce from Kenya to Europe is significantly higher compared to sea freight. This not only impacts the environment but also the profitability of industries reliant on airfreight. However, transitioning to sea freight presents an advantageous solution. It is environmentally friendly and economically viable, aligning climate action with development goals. How significant are the environmental concerns with air freight? Air freight constitutes about 2.5 percent of global carbon emissions while transporting just 1 percent of total global cargo. This environmental impact is a driving force behind the shift. The transition to sea...

Preparations for the 23rd Edition of the East African Community’s (EAC) micro, small and medium enterprises (MSMEs) trade fair that is expected to showcase the region’s innovations and trade are in top gear. The trade fair, dubbed, the Jua Kali-Nguvu Kazi Exhibition is expected to attract more than 1,500 firms from all the seven EAC partner States. Themed, “Connecting East African MSMEs to Enhance Intra EAC Trade,” the exhibition will run from December 5 to 15, 2023 at the Cercle Hyppique Grounds in Bujumbura, Burundi. The trade fair is expected to contribute towards realising the region’s development goals and aspirations by lending support to this budding sector of the economy, which needs public patronage and government support to make it sustainable. “The trade fairs further create a considerable impact on the image of the sector, which is today seen as the panacea to the daunting question of unemployment and poverty alleviation in the region,” noted the EAC Secretariat in a statement. The trade fair will also feature a daily symposium aimed at enhancing awareness of and the capacity of MSMEs. Preparations for the 23rd Edition of the East African Community’s (EAC) micro, small and medium enterprises (MSMEs) trade fair that is expected to showcase the region’s innovations and trade are in top gear. The trade fair, dubbed, the Jua Kali-Nguvu Kazi Exhibition is expected to attract more than 1,500 firms from all the seven EAC partner States. Themed, “Connecting East African MSMEs to Enhance Intra EAC Trade,” the exhibition will run from December...

When the European Union (EU) and the United States of America (US) announced their collaboration by signing a joint communique in September 2023 to construct Africa's inaugural transcontinental Lubito trade corridor, it symbolised a pivotal moment in Africa's economic journey. Should this venture succeed, it will span the mineral-rich Angola, the Democratic Republic of Congo (DRC), and Zambia. The region's strategic significance extends to the supply of other critical minerals such as lithium, copper, manganese and coltan. The new infrastructure is poised to play a pivotal role in collecting these minerals, which are crucial for producing electric vehicles, wind turbines, and computers. Thus, transforming it into a robust regional economic community comprising 16 Member States, it also promises to revolutionise the entire Southern African Development Community (SADC) region, calling for a clear strategy that can be used to support the local value additions. Reflecting on the growing desire among African countries, particularly those rich in raw materials, to move away from traditional exports and foster local job creation, the project holds the potential to transform the Southern African Development Community (SADC) into a robust economic hub and foster regional competitiveness. As the corridor unfolds, its broader implications for harmonising regulations and propelling the Africa Continental Free Trade Area (AfCFTA) also underscores the importance of a comprehensive continental infrastructure roadmap. Currently, Africa stands at a crossroads, and with strategic partnerships and inclusive development, it can redefine its narrative, offering a brighter future for its youth and becoming a global exemplar of...

Non-tariff barriers (NTBs) remain a key challenge to intra-African trade even after the launch of the African Continental Free Trade Area Agreement (AfCTA), experts have warned. Speaking during the fourth World Transport Congress which was held in Nairobi last week, players in the shipping and logistics industry said without tackling the commercial challenges posed by NTBs, the AfCTA dream will never be realised. NTBs include quotas, embargoes, sanctions, discriminatory levies among others. AfCTA aims to accelerate intra-African trade and boost Africa’s trading position in the global market. The forum also highlighted how the shipping industry is embracing technology and the role of transport and logistics service providers in promoting green shipping. George Kidenda, a shipping and logistics analyst in Nairobi, said in efforts to increase free trade, African governments must aim to reduce up to 97 per cent of taxes. “We need proper infrastructure and free transportation of goods to achieve this. Most of our roads are not passable. Our airlines do not have free landing rights,” Kidenda said. “We also lack internet connectivity.” Head of Kenya Airways cargo business division Peter Musola, while speaking at the meeting, emphasised the need for trade liberalisation in Africa. “One of the biggest challenges in Africa is the issue of mutual demand. Airplanes or cargo ships will go in one direction full and return empty and this has the effect of increasing the price of goods. Trade liberalisation will stimulate domestic trade. The price will drop,” Musola said. According to the 2021 UNCTAD...

The recent admission of Somalia into the East African Community (EAC) has brought to the forefront the complexities and challenges associated with trade within this regional bloc. Despite the opportunities that come with Somalia’s inclusion, a new report underlines vital issues that need to be addressed for the EAC to fully benefit from the potential of regional trade. Challenges in Regulatory Compliance The report highlights the difficulty of navigating the different regulatory frameworks that member countries have in place. These disparities can create barriers and inefficiencies in trade, affecting the smooth flow of goods and services across borders. The economic disparities between member states, such as Somalia, with its ongoing conflict and vulnerabilities to climate change, and more stable countries like Kenya and Uganda, can lead to imbalances and tensions within the trading bloc. Infrastructure and Economic Disparities Infrastructural inadequacies, particularly in the road and rail networks, are another significant issue. Inconsistent and underdeveloped infrastructure can hamper the movement of goods, increase costs, and further widen the economic disparities between countries. The report emphasizes that for the EAC to truly thrive, there needs to be a concerted effort to address these inequalities and invest in robust infrastructure. The Path Forward The report suggests that harmonizing regulations can significantly reduce trade barriers and inefficiencies. It also stresses the need to address economic inequalities among member states. Investments in infrastructure, particularly in transport networks, are essential in facilitating the movement of goods and reducing costs. Additionally, the report mentions the potential benefits...

Non-tariff barriers (NTBs), a complex web of regulatory and procedural stumbling blocks, are mounting considerable challenges for businesses within East Africa. These barriers, stretching beyond conventional tariff measures, are stifling the free movement of goods and services, consequently escalating operational costs and hampering trade in the region. NTBs: Obstructing Aspirations of Regional Integration These hindrances are emerging as a formidable threat to the hopes of regional integration among East African nations. The pursuit of a unified market, with its promise of fostering economic growth and competitiveness, is being thwarted by NTBs. The business environment is complicated by these barriers, which discourage cross-border trade and deter potential investors. Impact on Economic Development The elimination or significant reduction of these barriers is viewed as crucial in realizing the envisioned level of integration. Such a level is expected to stimulate investments, bolster intra-regional trade, and spur economic development in East Africa. However, the persisting presence of NTBs poses a significant challenge to this ambitious blueprint. Climate Reality and Economic Disruption In parallel, the Middle East and Central Asia are grappling with a grim climate reality. The regions are witnessing temperatures rising at double the global average, along with increasingly unpredictable and scarce rainfall. These adverse climate conditions are poised to exacerbate existing conflicts and disproportionately affect fragile states. The economic disruption that ensues is set to intensify. Despite the challenging climate situation, many countries within these regions are initiating measures to mitigate the impacts of climate change. Nevertheless, the need for more ambitious...

Leaders and experts from various sectors and regions shared their insights and experiences about the role of transport infrastructure in transforming the continent at the Africa Investment Forum (AIF), an annual business gathering that aims to raise funding for infrastructure and other projects in Africa. Participants gave examples of how transport infrastructure, such as roads, railways, ports and airports, can foster trade, integration, and growth in Africa. They generally agreed that Africa still has a huge infrastructure gap that hinders its development, stressing the need to increase infrastructure financing through innovative solutions such as those promoted at the AIF. Participants heard that African countries have a dual challenge in developing their transport infrastructure: they must ensure efficient, safe, and affordable mobility for all, while reducing the environmental impact of that infrastructure. This is a complex and urgent challenge that requires innovative ways of managing risks and attracting capital, particularly from the more risk-averse private sector. Dr. Akinwumi Adesina, President of the African Development Bank (AfDB), noted that AIF brings together world-class financiers that have the ability to use innovative financing instruments and mechanisms – such as pooled financing facilities, blended finance, and guarantees – to lower risks and increase returns. He called for significant investments to build better roads, bridges and ports, noting that the AfDB was leading the way in championing big ticket investments in transport infrastructure across the continent. “As of 2022, the African Development Bank had financed 25 transport corridors, constructed over 18,000 kilometres of roads, 27...

The 16 members of the Southern African Development Community (SADC) are exploring ways to further integrate their diverse economies and strengthen regional value chains. With a combined population of nearly 270 million people and $700 billion in GDP, the SADC bloc represents enormous potential for increased growth and development if member states can enhance economic cooperation and trade. By removing barriers to cross-border commerce, SADC aims to give regional firms access to wider markets, promote competition, facilitate investment flows, and develop joint manufacturing capacities. The current landscape is fragmented, with intra-SADC exports accounting for only 22% of total trade as of 2020. Deeper integration promises to unlock new industrial growth poles while expanding opportunities for resource-linked and agricultural exports within the bloc. Key initiatives aim to reduce tariffs and streamline cross-border trading procedures. The SADC Free Trade Area, enacted in 2008, eliminated tariffs on 85% of goods traded within the bloc. Further progress on the remaining 15% of sensitive items and reducing non-tariff barriers will help companies benefit from regional market access. The Regional Indicative Strategic Development Plan 2020-30 targets lifting intra-regional trade to 40% of total trade by 2030. Harmonizing regulatory standards and product requirements across SADC members can also make trading simpler for regional firms. Streamlining cumbersome border procedures, documentation and customs clearance processes through digitalization and one-stop border posts can bring down transaction costs. Ambitious proposals like the SADC Customs Union aim to eliminate duties on imports from outside the region. A unified approach to external tariffs...

Within the framework of the working European Union group spear-headed by Germany, United Kingdom and The Netherlands, a number of African countries have been listed to receive considerable investment support and further engage in forward-looking projects under the EU flagship titled the G20 Compact with Africa. The G20 Compact with Africa conference, which aims to help bolster private investment in the world’s poorest, but fast-growing continent, was held November 20 in Berlin, Germany. The conference underscored a strong renewal of business interest in Africa. It further portrays efforts by the European Union members in strengthening economic relations with the continent, especially Africa’s potential for renewable energy. As widely known, Europe and the United States are jostling with Russia and China for geopolitical influence, critical minerals and new economic opportunities in the world’s second most populous continent. In practical terms, Africa wants the European Union to remain as its partner for mutually beneficial cooperation and play a constructive multifaceted role in promoting the positive development of Africa-EU relations. G20 Compact with Africa Conference hosted by the Federal Chancellor of Germany with preceding “G20 Investment Summit – German Business and CwA Countries.” According to documents, the member countries of the G20 Compact are Morocco, Tunisia, Egypt, Senegal, Guinea, Ivory Coast, Ghana, Togo, Benin, Burkina Faso, Rwanda, Democratic Republic of Congo and Ethiopia. Reports said German Chancellor Olaf Scholz, who has visited Africa several times since taking office in late 2021, held bilateral talks with several African countries before finally hosting a German-African...

The African Continental Free Trade Area (AfCFTA) represents a historic opportunity to boost intra-regional commerce, reduce poverty, and spur Africa’s economic transformation. The World Bank estimates that AfCFTA could lift over 50 million people out of extreme poverty and raise incomes by nine per cent once fully implemented. However, realising these gains will require expanding access to financing and investment to energise trade and engage all Africans in the AfCFTA’s success. To achieve this, it is imperative to recognise that countries do not trade; people do. Therefore, there exists an urgent need to create viable avenues for trade financing that can empower individuals, entrepreneurs and businesses across the continent. The AfCFTA represents a historic opportunity to foster economic integration and create a single market for goods and services across Africa. However, the success of this ambitious initiative relies on the active participation of a multitude of actors, from small and medium enterprises to established businesses, and from rural farmers to urban entrepreneurs. Recognising that these diverse players are the true agents of trade, it becomes evident that facilitating their involvement requires a targeted approach to address the financial barriers they face. Bridging the trade finance gap A persistent challenge for African traders is limited access to the affordable financing needed for cross-border transactions and supply chain operations. The trade finance gap for Africa is estimated at over $100 billion annually. Boosting financing from both public and private sources is imperative to enable businesses of all sizes to engage in the...