By providing the framework to establish robust regional value chains, the African Continental Free Trade Area will help to develop the continent's industry and agriculture and drive prosperity. The establishment of the African Continental Free Trade Area (AfCFTA) has been hailed, rightly, as having the potential to very considerably alter the continent’s fortunes for the better. A good deal of this conviction is based on the AfCFTA’s principal mandate which is to forge regional value chains (RVCs). Likewise, just as the AfCFTA fosters the establishment and consolidation of RVCs, so do strong RVCs provide the web of interconnected cogs and springs that keep the AfCFTA going deeper and further. The AfCFTA and RVCs are mutually reinforcing factors in the pursuit of Africa’s integration and development agenda. African economies have been characterised by a heavy reliance on the export of raw materials, often failing to capture the full value of these resources. This traditional export model not only limits economic diversification but also perpetuates vulnerability to external shocks. The AfCFTA offers a unique chance to reverse this trend by fostering intra-regional trade and encouraging the creation of RVCs. The development of RVCs involves a multi-step process that encompasses various stages of production within a region, from raw material extraction and processing to production of intermediate goods, to final product assembly. Read original article

What you need to know: Kenya, for example, produces wheat, which is mainly milled into flour that costs approximately Sh100 per kilogramme, or Sh100,000 per tonne. However, the country imports processed wheat products such as noodles expensively, yet they can easily be produced locally given a conducive environment. Kenneth Kurui, a smallholder wheat farmer in Narok County, sells unprocessed produce to local millers at Sh6,000 per 90 kg bag, or Sh66,000 per tonne. In the same breath, Indofood, an Indonesian company that adds value to wheat by making Indomie, sells the beef-flavoured noodles to Kurui at Sh45 per 120 grammes packet, which translates to Sh375,000 per tonne. With the difference of more than Sh309,000 between a tonne of unprocessed wheat and a tonne of indomie, still, Kurui has to lease the land on which he grows the wheat, cultivate it, buy the seed and other farm inputs, and weed before counting the cost of harvesting, activities that consume more than half of his gross income. “Due to poor local market prices against the ever-rising cost of inputs, coupled with devastating climatic conditions, we as smallholders are forced to invest with a lot of caution because many are times when we end up with losses,” said Kurui, who also works in Nairobi to supplement his wheat farming venture. However, the recently released 2023 Africa Agriculture Status Report (AASR) points out that there is still a window of hope for smallholder farmers like Kurui, but only if governments puts in place policies...

As fashion giants are imposing varied standards and requirements for clothing manufacturers and exporters in the developing countries, including Bangladesh, it impedes making factories environment-friendly and sustainable in transition process. In this connection, trade experts argue that there should be some harmonisation of standards regarding the green factories producing ready-made garments (RMG) so that more manufactures feel encouraged to join the rally on eco-friendly path of doing business. They made the observations in a working session of the WTO Public Forum 2023 on Thursday in Geneva. Panellists at the discussion, titled 'Green trade measures and their development implications: a focus on the textiles and clothing global value chain', also argued that urgent action is needed to address the emerging global climate emergency. They also noted that new sectoral initiatives driven by needs to achieve net-zero point on carbon emissions have increased, including in the textiles and clothing sector. As the sector has historically been typical in reducing poverty through trade, it has enabled many countries like Bangladesh to gain a foothold into industrialisation and global value chains, they said. Taking part in the session as a panellist, Dr Fahmida Khatun, executive director of the Dhaka-based Centre for Policy Dialogue (CPD), said the export-oriented textiles and readymade garment (RMG) sector is an important driving force of Bangladesh's economy as it is a source of employment generation and foreign-exchange earning. She mentioned that, in the fiscal year 2022-23, the sector earned US$ 48.36 billion which accounted for 87.06 per cent of the...

At least $85 billion worth of global trade is currently affected by trade restrictive measures aimed at addressing the spillovers of food insecurity brought about by the effects of the Russia-Ukraine War. This is according to the 2023 edition of the World Trade Report themed Re-globalisation For a Secure, Inclusive and Sustainable Future launched September 12 during the WTO Public Forum in Geneva. On July 17, the Black Sea Grain Initiative collapsed after Russia exited the arrangement which had paved the way since July 2022 for Ukraine, a key source of grains in global supply, to resume exports through the Black Sea, raising fears of further rise in inflation owing to re-emergence of supply related bottlenecks. Relatively high costs The World Trade Report further states that developing economies stand to lose the most if the geopolitical falling out between Russia and Ukraine is not resolved soon. Countries adopting trade restriction measures derail an ecosystem already is disadvantaged from a global standpoint owing to poor integration to global value chains. “World Trade Organisation (WTO) members have increasingly implemented new trade restrictions in the context of the war in Ukraine and food security crisis”, the global trade body states in its report. “Out of the 96 export restrictive measures on food, feed and fertilisers introduced since the start of the war in late February 2022, a whopping 68 were still in place by the end of February 2023 covering roughly $85 billion of trade”, the report added. The WTO is calling for efforts aimed...

Globally, much movement is underway in transitioning the transportation sector to cleaner fuel sources, and even more so across Africa. Of note is continent-wide efforts to resuscitate the rail sector. Due to its energy efficiency, reduced greenhouse gas emissions and lower cost per ton kilometre, rail transportation can play a crucial role in Africa’s industrialisation efforts. This market is vital to delivering on the promise of the African Continental Free Trade Agreement. Here is a snapshot of four projects addressing the need for rail transport infrastructure development this year so far. Apart from new build programmes, committing to continuous maintenance works on existing rail infrastructure is essential. One critical area for railway infrastructure is turnout sets. These rail configurations allow trains to change tracks smoothly without stopping. These sets also allow trains to re-route to avoid congestion and delays and to operate around maintenance work. For example, an important rail line in South Africa that connects the country’s coal to international markets experienced several such breakdowns, affecting mining companies’ ability to evacuate their coal export during H1 of 2023. Relief was reported in September after installing 18 sets during the annual July shutdown of the coal line from Lephalale in Limpopo through Mpumalanga to the Port of Richards Bay in KwaZulu-Natal. More work is underway. Register for Smarter Mobility Africa, taking place 1-3 October 2023 at Gallagher Estate in Gauteng. Use promo code ESI20MP to get the insider’s 20% discount on your ticket. DRC’s rail transportation momentum Of course, besides...

In a partnership spanning 13 years, the British High Commission and TradeMark Africa (TMA) have achieved significant milestones in reducing trade barriers for Uganda and its neighbouring countries, demonstrating why such collaborations matter, the two bodies announced recently. At a recent gathering, which was attended by notable figures including UK trade commissioner for Africa John Humphrey, Ambassador Kate Airey, the British high commissioner to Uganda, and TMA chief executive officer David Beer, highlighted their achievements since 2010. They said their work has led to substantial reductions in both the cost and time required for cross-border trade, benefiting Ugandan businesses and fostering regional economic growth. They pointed out the remarkable reduction in container transit time from Mombasa to Kampala, which dropped by a third between 2017 and 2021. General Katumba Wamala, Uganda’s minister of Works and Transport, expressed gratitude for the support received in various trade facilitation facets, including the construction and operation of One-stop border posts, road upgrades, the development of electronic cargo tracking systems, and support for farmers and traders in the grain sector. These interventions have not only reduced the cost and time of cross- border trading but have also introduced automated systems, minimized losses, and improved the economic fortunes of the region’s residents. The partnership extends beyond the UK, with significant contributions from development partners such as the European Union, Canada, Denmark, Finland, USAID and the Netherlands. These partners have bolstered trade facilitation in areas such as customs systems modernization, trade automation systems, harmonization of standards, and...

The flagship Africa Agriculture Trade Monitor (AATM) calls for the diversification of import sources to mitigate the adverse effects of the Ukraine crisis. African trade agreements can boost agricultural imports and exports and curb the adverse effects of climate change by including actionable provisions, according to the latest Africa Agriculture Trade Monitor (AATM). Published by AKADEMIYA2063 and the International Food Policy Research Institute (IFPRI), the 2023 AATM calls for concerted regional- and continental-level action toward sustainable trade flows and more environment-friendly trade policies. The report also delves into the negative impacts of the Russia-Ukraine war on fertilizers and food trade and recommends action to lessen the effects of the shocks on African countries and consumers. Unveiled at this year’s Africa Food Systems Forum (AGRF) in Dar es Salaam, Tanzania, the 2023 AATM provides high-quality trade statistics using consistent indicators to monitor trends in Africa’s participation in global trade as well as the status of intra-African trade. The report finds that Africa’s regional trade agreements (RTAs) do not exert a significant impact on its agricultural trade. The analysis attributes this to “shallow” trade agreements that focus on tariff reductions only, with limited impact on the agri-food market. The research highlights opportunities to include provisions on non-tariff measures and enhance their legal enforceability to accelerate intra-African agri-food trade. The report also calls for RTAs to include climate-related provisions to boost the contribution of trade to combat the negative impacts of climate change. “Amid global shocks like Ukraine and COVID-19, as well as the climate crisis, which is emerging as the biggest threat to...

his article comes in response to recent studies (1) which reveal that: – 45% (2) of African companies have classified Digital Transformation (DT) as a strategic priority. The adoption of digital technologies in African companies can increase productivity by up to 20% and profits by up to 25% (3). However, in Africa, the adoption of DT presents unique opportunities and challenges. In this article, I invite you to answer the question: What strategies can African companies use to maximise the return on investment (ROI) of their DT projects? Let’s look at them in turn: What is Digital Transformation (DT) in the African context. How Return on Investment (ROI) is calculated. What strategies to employ to maximise the ROI of DT projects. Conclusion 1- What is Digital Transformation (DT) in the African context? In my opinion, and according to the Draft Digital Transformation Strategy for Africa (2020-2030) (4), Digital Transformation consists of: An articulated set of initiatives: For example, by 2030, all African citizens should be digitally enabled and able to safely and securely access at least 6 Mb/s [megabits per second of Internet bandwidth] anywhere on the African continent, at an affordable price not exceeding 1 cts USD per Mb, via a smart device manufactured on the continent, at a price not exceeding 100 USD, to benefit from all basic electronic services and content, of which at least 30 per cent are developed and produced in Africa. Initiatives aimed at replacing analogue technologies (5). Actions based on digital technologies: for...

TradeMark Africa, in collaboration with the IOTA Foundation, is actively working to enhance trade efficiency across Africa by implementing advanced technology solutions. The IOTA Foundation’s partnerships with TradeMark East Africa and the European Union have led to significant advancements in the digitalization of trade processes. Aid for trade organization TradeMark Africa has been actively working on boosting trade and economic activity across Africa by adopting efficient technology systems. Recently, the CEOs of TradeMark Africa met with officials of the Kenya Revenue Authority to discuss the benefits of their previous investments and the customs efficiency. TradeMark Africa has been working on speeding up the clearance of goods, while decreasing dumping and diversion on the Northern corridor and thereby improving transparency. Aid for trade organization TradeMark Africa has been actively working on boosting trade and economic activity across Africa by adopting efficient technology systems. Recently, the CEOs of TradeMark Africa met with officials of the Kenya Revenue Authority to discuss the benefits of their previous investments and the customs efficiency. TradeMark Africa has been working on speeding up the clearance of goods, while decreasing dumping and diversion on the Northern corridor and thereby improving transparency. Read original article In addition to their work on customs efficiency and trade facilitation, TradeMark Africa is also exploring avenues to positively impact the healthcare sector, particularly in the realm of pharmaceutical trade. Recognizing the importance of affordable medication in enhancing public health across the continent, they have initiated discussions on the pricing of crucial drugs, including...

Lack of access to information on trade regulations, violence and harassment and lack of access to finance are hurting women and youth-led businesses in East African Community’s cross-border trade. This is according to the East African Women in Business Platform (EAWiBP). Women cross-border traders also often face discrimination at the borders where they have high chances of being harassed by border officials, especially when they travel alone, with cases where they are charged higher fees than men. Among the biggest impediments however is lack of information they need to navigate the complex trade rules and regulations despite the existence of a Simplified Trade Regime (STR) on customs procedures and documentation, leading to delays and penalties. “Information asymmetry is still a major challenge facing small-scale traders in the EAC region,” said Janice Kimaro, Regional Coordinator at the EAWiBP. About 47 per cent of women in cross border trade still use informal routes, according to a recent report by TradeMark Africa. This equates to more than half of the businesses, where 80 per cent of trading is run by women. According to TradeMark, the majority of the traders are unaware of Simplified Trade Regime (STR) on customs procedures and documentation, hence avoiding formal border posts leading to a higher cost of business. STR, provided under the EAC Customs Union, is aimed at attracting small traders transacting regularly in low-value consignments. The provision enables simplified certificate of origin, exempting consignments of goods that originate in the EAC and are valued under $2,000 (Sh292, 200) from payment of import duty in the EAC destination country. Speaking...