Africa’s free-trade pact will help shift the continent away from its over-reliance on volatile commodity exports and boost manufacturing, according to the African Development Bankm (AfDB).Sectors where African products already have a competitive advantage have the most to gain from the deal that joins the markets of more than 50 countries, making it the largest free-trade zone in the world, AfDB President Akinwumi Adesina (pictured) said in an interview in Niger’s capital, Niamey.This was after Benin and Nigeria signed the African Continental Free-Trade Agreement at the weekend, paving the way for trade with reduced tariffs to start next July. “Manufacturing, trading in value-added products and strengthening supply chains will allow for markets to grow and for new markets to emerge,” Adesina said.“SMEs that account for 80 per cent of all trade on the continent will benefit, as well as the financial sector, as digital payments will be needed to transact.”Commodity exports dominate even in Africa’s two biggest economies, with mining production accounting for about half of South Africa’s shipments while crude oil generates 90 per cent of Nigeria’s foreign income.The mechanics of the deal now has to be negotiated.A digital system for payments converging one country’s currency to another member state’s is the most important mechanism to have in place before trading starts, Adesina said.That’s where the Economic Community of West African States’ plan to adopt a common trade currency will also help because it could reduce foreign-exchange risks, he said.Infrastructure gapAccess to the continental market and an increased focus on...

Local manufacturers are likely to benefit immensely from a newly implemented Africa-wide trade pact that provides access to a bigger market for their goods. The African Continent Free Trade Area (AfCFTA) protocol, launched at the Africa Union summit in Niger on Sunday after five years of deliberations, provides a single market of goods and services for 1.2 billion people with an aggregate Gross Domestic Product (GDP) of over $2 trillion (Sh200 trillion). ELIMINATE DEFICIT The adoption of the historic 55-nation agreement makes the whole continent a single market. Protocols will be aligned such that a Kenyan farmer can export avocado to Egypt duty-free, just as a Rwandese will be able to buy cocoa from Ghana. Kenyan manufacturers and exporters are upbeat that the trading bloc will be a boon for the country’s trade. Export Promotion Council chief executive Peter Biwott said Africa-wide trade, if well planned, could double the country’s exports, thereby eliminating the Sh1.15 trillion gap between exports and imports. “We import [goods worth] Sh1.7 trillion and we export Sh613 billion. The deficit can be eliminated if we increase our manufacturing and export enterprises. We target to get our exports to the mark of Sh2.3 trillion,” said Mr Biwott. Robust plan The government, he said, has a robust plan to make export trade efficient for existing enterprises as they recruit and train new ones in collaboration with the county governments. This is in a bid to scale up the range of products besides improving the manufacturing sector as a...

The success of the African Continental Free Trade Area (AfCFTA) will be measured largely by its ability to change lives, reduce poverty and contribute to economic development in Africa. This is according to the ninth edition of the flagship Assessing Regional Integration in Africa report (ARIA IX) launched during the African Business Forum. Expounding on the report, United Nations Conference on Trade and Development Secretary General Mukhisa Kituyi said that competition, investment and intellectual property rights are crucial requirements in the next phase of the agreement. He also urged the African business community to take ownership of the integration effort on the continent. The report highlights challenges facing regional integration which include limited energy and infrastructure development, insecurity and conflicts and limited financial resources among others. Going forward, the report says e-commerce is likely to be a significant driver and outcome of intra-African trade. “The public and private sectors are increasingly adopting e-commerce platforms. Governments deliver services through them, electronic marketplaces aggregate consumer and producer demand as well as trade-related services, traditional businesses have incorporated e-commerce into their business models and operations and individual entrepreneurs and small businesses use social media platforms to engage with market opportunities,” reads the report. Source: Capital Fm

Kenya could slowly be losing its strategic lead in East Africa due to the changing geopolitics and the newfound unity between Ethiopia, Eritrea and Somalia. Analysts suggest Kenya needs to adjust its foreign policy in light of Ethiopian Prime Minister Abiy Ahmed Ali becoming the regional point man to fix problems ranging from the Kenya-Somalia maritime dispute to the conflict in Sudan. TRADE HUB As an important trade hub for landlocked countries, Kenya has maintained its the middle-of-the path stance taken during the Cold War under the Non-Aligned Movement. As a result, Kenya has kept its allies like the US and China in investments, leadership of international organisations and tackling threats like terrorism, climate change and HIV/Aids. In 2014 Kenya developed its first written foreign policy since Independence in 1963, with five main pillars — peace diplomacy, economic diplomacy, diaspora diplomacy, environment diplomacy and cultural diplomacy. However, Kenya’s peace diplomacy is being overshadowed by organisations like the Intergovernmental Authority on Development (Igad) with Prime Minister Abiy as its chairman. According to Abdiwahab Sheikh Abdisamad, director and senior consultant at Southlink Consultants and a Horn of Africa political scientist at Kenyatta University, oil multinationals are lobbying for Somali interests in their own countries. He added that Kenyan foreign policy towards Somalia needs restructuring since the fight against Al Shabaab has attracted new stakeholders, with the Gulf crisis spilling over into Somalia. “Kenya should side either with the Saudi-led coalition or the Qatari and Turkey alliance. To date, Kenya has not sided...

The AfCFTA will be governed by five operational instruments: the Rules of Origin; the online negotiating forum; the monitoring and elimination of non-tariff barriers; a digital payments system and the African Trade Observatory. Each one was launched by different Heads of State and Government that included President Cyril Ramaphosa of South Africa, President Abdel Fattah El Sisi of Egypt who is current Chairperson of the AU; Mr. Moussa Faki Makamat, the Chairperson of the African Union Commission; and President Mahamadou Issoufou of Niger, who is the Champion of the AfCFTA. The launch ceremony included “a roll call of honour”, at which the 27 countries that have ratified the instruments of the AfCFTA were announced, and those that have signed but not yet ratified were mentioned. A commemorative plaque of the signing was also unveiled. The AfCFTA agreement was adopted and opened for signature on 21 March 2018 in Kigali. The AfCTA entered into force on 30 May 2019, thirty days after having received the twenty-second instrument of ratification on 29 April, 2019 in conformity with legal provisions. “The speedy entry into force of the AfCFTA is a source of pride for all of us”, said AU Commission Chairperson Mr. Moussa Faki Mahamat. He described the free trade agreement as one of the instruments for continental integration in line with the objectives of the Abuja Treaty and the aspirations of Agenda 2063. The Chairperson also highlighted the importance of peace building and security on the continent, adding that “it would be...

Kenya’s manufacturing sector is betting big on the proposed Africa-wide trade pact that will provide access to what has been described as the biggest market in the world. Nigeria became the latest member to sign the landmark agreement, which aims to increase trade among African countries. With Eritrea as the only African country not to be part of the trading bloc, the potential for the regional initiative to transform the economies of the member states looks pretty real. According to the Oxford Business Group, Kenya’s exports are projected to increase by over Sh10.2 billion ($100 million) following full implementation of the free trade pact. The group notes that with 41.2 per cent of Kenya’s exports destined for free trade pact member states in 2011, compared with the 13.4 per cent share of imports from the same zone, Kenya enters the bloc from a position of relative strength. Only 12 per cent of Africa’s trade is between countries, signifying the huge promise for participating countries. Kenyan manufacturers are banking on the agreement to take the lead in producing competitive products in terms of quality and prices. “The Continental Free Trade Area agreement provides an opportunity for Kenya to become a manufacturing hub for Africa,” said Kenya Association of Manufacturers (KAM) chief executive Phyllis Wakiaga. President Uhuru Kenyatta has been at the forefront in pushing for deeper trade ties among African countries, driven by the realisation that Kenya will reap massive benefits, particularly in efforts to achieve industrialisation. When he joined other...

Five months after the East African Community deferred signing the controversial Economic Partnership Agreement with the European Union, it has emerged that Tanzania’s unyielding stance could force a stay of the status quo as the EU is hesitant to push the region to sign a trade deal that threatens its cohesion as a bloc. Well-placed sources at the European Commission told The EastAfrican that the EAC negotiated and concluded a bilateral trade agreement with the EU as a bloc, and it must remain as such. “All EAC members need to sign and ratify the agreement,” said the EC sources. The EPA gives EAC products total access to the EU market, with 82.6 per cent of imports from the EU allowed into the EAC market. The remaining 17.4 per cent of imports from the bloc — labelled “sensitive,” and largely consisting of farm and dairy products — would be progressively liberalised within 15 years from when the agreement comes into force. Kenya and Rwanda have signed the deal. However, Tanzania is unhappy about the trade pact, arguing that the agreement will have serious consequences for its revenues and the growth of its industries. Burundi refused to sign given its deteriorating relations with Europe. Uganda argued that signing the pact as individual countries would compromise the unity of the region, hence its decision to wait it out. Kenya has been lobbying its EAC partners to enforce the EPA on an individual basis rather than as a bloc to allow those that have not signed...

With 54 out of 55 African Union member states having signed the Africa Continental Free Trade Agreement (AfCFTA), the continent is on the verge of becoming the world’s largest free trade area which will merge the massive area into a single market of 1.2 billion people with a combined GDP of US$2.5 trillion (over N$35 trillion), according to the UN Economic Commission for Africa. However, local analysts have cautioned that the ambitious initiative is being hampered by issues such as non-tariff barriers, lack of financing and infrastructure problems. It has been estimated that that the Africa needs at least US$300 billion (approximately N$4,2 trillion) by 2020 to build quality infrastructure to facilitate the free trade agreement. “For continental trade to increase, substantial investment in infrastructure is required, not only in transport infrastructure, but in border infrastructure, in communication technologies so that business people can communicate easily across the continent, in financial infrastructure so that money can flow easily, in electricity infrastructure so that border posts can operate effectively 24 hours a day, etc. In addition, customs and other documentation should be unified to ease cross-border trade, as well as transport regulations such as axle loads, working hours of truck drivers etc,” commented Klaus Schade, a local economic analyst. Responding to questions from New Era, Schade added that trade across borders requires movement of people across borders, such as business persons, traders, truck drivers and so forth. “Namibia has taken the first step and embarked on visa on arrival, although the...

The success of the African Continental Free Trade Area (AfCFTA) will be measured largely by its ability to change lives, reduce poverty and contribute to economic development in Africa. This is according to the ninth edition of the flagship Assessing Regional Integration in Africa report (ARIA IX) launched during the African Business Forum. Expounding on the report, United Nations Conference on Trade and Development Secretary General Mukhisa Kituyi said that competition, investment and intellectual property rights are crucial requirements in the next phase of the agreement. He also urged the African business community to take ownership of the integration effort on the continent. The report highlights challenges facing regional integration which include limited energy and infrastructure development, insecurity and conflicts and limited financial resources among others. Going forward, the report says e-commerce is likely to be a significant driver and outcome of intra-African trade. “The public and private sectors are increasingly adopting e-commerce platforms. Governments deliver services through them, electronic marketplaces aggregate consumer and producer demand as well as trade-related services, traditional businesses have incorporated e-commerce into their business models and operations and individual entrepreneurs and small businesses use social media platforms to engage with market opportunities,” reads the report. Source: Capital Business

Rwanda parliament has ratified the 2015 Tripartite Free Trade Area (TFTA) agreement, a market of three regional blocs. TFTA brings together country members of the Common Market for Eastern and Southern Africa (COMESA), East Africa Community (EAC) and the Southern African Development Community. The ratification was passed this Wednesday without going through the commission scrutiny but came with debate on its importance, fears of duplication of the recently launched African Continental Free Trade Area (AfCFTA) worth $3.4 trillion. TFTA consists of a US$1.2 trillion free trade area, incorporating 26 African nations, with a population of 632 million people. The overall aim of the TFTA is to remove barriers to trade and to ease the movement of people between its signatory nations. Minister of Trade and Industry, Soraya Hakuziyaremye who presented the bill said “This agreement is very important to our export market since it introduces our country to a much wider market as it includes the Southern Africa Development Community of which we are not member.” At first, some members of parliament were hesitant to endorse it on ground that the agreement may be just a duplication of the already existing AfCFTA. “I sense an issue of duplication here. We should be sure that we would not loose taxes to these agreements,” MP Frank Habineza said. For MP Ignacienne Nyirarukundo, the AfCFTA was enough. MP Christine Muhongayire backed the idea of her colleagues but advised that parliament takes its time to assess the deal in the commissions. “It’s advisable to...