Africa needs trade not aid. This has been the reverberating message from many African leaders, economists and business pioneers of late. At this September’s UN General Assembly, Ghanaian President John Dramani Mahama and Senegalese President Macky Sall addressed world leaders with this very sentiment. The emphasis on trade over aid is in part a backlash against the modest results of development aid. Africa has received over $1 trillion ininternational aid over the past 50 years, but this has been ineffective in combating poverty and spurring economic growth in a sustainable way. Moreover, aid inefficiencies are acutely heightened where there is a lack of strong political institutions, a common difficulty across the continent. In contrast, there is a proven link between openness to trade and economic performance, an approach that has taken centre stage in the trade policies of the EU, Africa’s second largest trading partner after China. Towards a reciprocal relationship The embodiment of the shift towards trade can be seen within the context of the Economic Partnership Agreements (EPAs) between a number of African groupings (Central Africa, Eastern and Southern Africa, East African Community, Southern African Development Community and West Africa) and the EU. Essentially, the EU wants to move towards a reciprocal trading relationship with the continent, in which African regional groups gain duty- and quota-free access to the EU market. In return, over time, participating African countries will have to liberalise just 83% of their markets, as sensitive products will be protected. For example, the Economic Community...

By Jean d'Amour Mbonyinshuti Rwanda and DR Congo have signed a new agreement establishing a framework for bilateral cooperation in the area of cross-border trade and elimination of non-tariff barriers. Officials in charge of trade from both countries signed the memorandum of understanding (MoU), last week, in Rubavu District, during the official launch of the Common Market for Eastern and Southern Africa Simplified Trade Regime (COMESA STR). The move seeks to ease small-scale trade by waiving import duty on products whose worth is below $2000 (about Rwf1.6 million), according to officials. It is especially expected to help thousands of small-scale cross-border traders, largely women, to carry out their daily business smoothly. There is a list of 168 products categorised into agricultural, livestock, fisheries, construction, cosmetics and manufactured products. A joint periodic review will be conducted every six months to see if there are more products to add or remove, officials said. According to Francois Kanimba, the Minister for Trade, Industry and EAC Affairs, both the MoU and the Simplified Trade Regime will ease cross-border formal and informal trade between the two countries. He said the launch of STR was long overdue as Rwanda and DR Congo are member states of COMESA. The framework agreement aims to facilitate cross-border trade; eliminate non-tariff barriers; commercial and customs fraud; and ensure proper management and exchange of information and statistics, among others. Kanimba explained that it is part of government's strategy to promote trade with all its neighbouring countries through setting up required infrastructure,...

WASHINGTON: The collapse of free trade talks between Canada and the European Union is yet another sign of increasingly stiff resistance to economic globalization. Despite seven years of talks between Ottawa and Brussels, the CETA Treaty crashed into a wall Friday (Oct 21) after being rejected by the Belgian region of Wallonia, making it impossible for the European Union to approve the deal. That was an ominous sign for another ambitious treaty, the Transatlantic Trade and Investment Partnership between the United States and the EU, which also faces strident opposition on both sides of the Atlantic. And one huge deal already struck, the Trans Pacific Partnership between the United States and 11 other Pacific Rim countries, is foundering because of the refusal so far of the US Congress to ratify it. And now, both candidates for the White House, Democrat Hillary Clinton and Republican Donald Trump, say they do not support the treaty. It is a sharp reversal of a quarter-century since the fall of the Berlin Wall of support in the world's leading economies for freer trade and globalization. Now, the enthusiasm for breaking down borders appears to be fizzling out. "We are seeing the results of several decades of failures by political leaders to take the concerns over trade seriously," said Edward Alden of the Council on Foreign Relations in Washington. For many years accusations have mounted that the progressive breaking down of trade barriers and removal of import duties in advanced economies has caused deindustrialization and huge...

Lower commodities prices have had some far-reaching effects on African economies. For exporters, weaker revenue has damped growth. Consider Nigeria, Africa’s largest economy and biggest oil producer. The country’s gross domestic product contracted 2.1 percent in the second quarter, following a 0.4 percent slump in the first. Adjusting to this new reality will take time for energy exporters. Most African economies, though, aren’t in the oil business. For them, lower fuel costs support growth and living standards. So fortunes are set to diverge across the continent. In fact, the narrative could change from “Africa Rising” to “Africa Tilting” as commodity exporters in West, Central, and Southern Africa struggle to find new sources of growth, while East African economies develop and integrate into a more robust—and potentially huge—regional market. From 2010 to 2014, economic growth in sub-Saharan Africa averaged 5.2 percent. After oil prices plunged in 2014, growth slowed to 3.4 percent in 2015. It’s likely to be weaker still in 2016, but the decline in aggregate terms largely reflects slowdowns in Nigeria, fellow oil exporter Angola, and South Africa. The three countries accounted for about 60 percent of sub-Saharan GDP in 2015 but less than 30 percent of its population. For Bloomberg Intelligence analysis and data on Africa. Deeper integration, better-functioning markets, and improved infrastructure could all bear fruit as the continent pursues other sources of growth. East Africa is leading the way. The African Development Bank, in its inaugural Africa Regional Integration Index Report, rated the East African Community—Burundi,...

Kenya is on track to launch its 472km Standard Gauge Railway, which links the port city of Mombasa and the capital, Nairobi. This is the first phase of the 13.8 billion dollar line, which will connect Kenya, Uganda, Rwanda and eventually South Sudan and the Democratic Republic of Congo. The Standard Gauge Railway formed the bulk of Chinese finance deals to Kenya signed in 2013. Speaking about the track’s progress, Atanas Maina, Managing Director of Kenya Railways, says, "In terms of civil works, the project is 99% complete. We have laid the track and we will be starting testing and commissioning from February going through to June and we believe we will be ready for the first run by the June 01, 2017." Kenya is betting on the new line to decongest the port of Mombasa and her roads, while at the same time, shorten the journey for both passengers and freight. The Standard Gauge Railway has a capacity of 22 million tonnes. “The Metre Gauge is no longer able to fully respond to the demands of this economy and the region. Its maximum capacity is 5million tons and our port is doing close to 30 million tonnes. We need a faster, efficient high capacity standard gauge railway," says Atanas Maina. At the construction site, work is continuing around the clock. The country's biggest infrastructure project is taking shape and just like the meter gauge line built by the British in 1895, controversy has dogged the Standard Gauge Railway. At...

Stability may have returned to Burundi but for traders in Cibitoke, the hotspot of the conflict set off by President Pierre Nkurunziza running for a third term last year, the good old days seem over. “We used to earn between $80 and $100 per day but now we get around $20 for the entire month, which is too little to pay rent and meet home needs,” said Caroline Akeza, a hair dresser. Until the protests, Cibitoke was one of Bujumbura’s busiest neighbourhoods, with booming small businesses. Now the streets are almost empty with few shops opened as most residents have relocated to safer areas. “I used to earn about $5 per day but now even getting $1 is a problem,” said a cobbler who did not want his name disclosed. For the businesses that have reopened in Bujumbura, scarcity of foreign currency has limited their scope of operation. The plight of small traders underscores the challenge Burundi has in improving the livelihoods of its citizens. During the International Day for the eradication of poverty last week, the United Nations Development Programme director in Burundi Natalie Boucly said urgent measures needed to be taken to reduce poverty. “In a country like Burundi where the majority of the people live on not more than $1.25 per day, the government and all stakeholders should unite to meet the needs and aspirations of all citizens for the sake of the present and future generations,” Ms Boucly said. Burundi is now ranked as the poorest...

The Common Market for Eastern and Southern Africa (Comesa) is considering admitting Somalia and Tunisia into the bloc. “[The Summit] mandated the Bureau of Council to enter into negotiations with Tunisia and Somalia on terms and conditions of accession to the Comesa Treaty,” reads part of the communique after the bloc’s Summit held in the Antananarivo, Madagascar, on October 18-19. Comesa spokesman Mwangi Gakunga could not say how long these negotiations will take before a decision on the two countries’ application is reached, as this is determined by the bloc’s highest decision making body — the Heads of State Summit or Comesa Authority. “Upon receipt of the application for membership, the Authority may prescribe the conditions and such other conditions for admission which shall be communicated to the applying state. Article 3(3) of the Regulations provides that admission of membership shall be decided by the Authority,” the regulations state. In 2005, Tunisia applied for observer status to Comesa, but its application was neither discussed nor endorsed by the member states. In February, it renewed its push to formally join the bloc when it wrote to Comesa Secretary-General Sindiso Ngwenya. Mr Ngwenya said that under Article 1(4) of the Comesa Treaty, Tunisia was eligible for admission as it is “an immediate neighbour of a member state of Comesa…upon fulfilling conditions that may be determined by the Comesa Authority.” Source: The East African

Kenya has been pushed to open its market to more sugar from the Common Market for Eastern and Southern Africa in exchange for an extension to 2019 for the importation of duty-free sugar from outside the 19-member bloc. During the just concluded Comesa Summit in Antananarivo, Madagascar, members successfully negotiated for Kenya to allow more sugar to be imported from the region outside the country quotas during shortages. This quota allocation criteria was backdated to August 2016 giving Comesa members who produce sugar more unfettered access into the Kenyan market. The Summit also required Kenya to expedite the privatisation of sugar factories among other measures that improve the industry’s competitiveness in order to end reliance on the Comesa safeguards. Kenya is now expected to give a scorecard on the status of its sugar industry at the end of the safeguard. Kenya has so far enjoyed the protection for 14 years. The current extension would have expired in February 2017. The Kenya delegation at the Summit made a case for the extension on the grounds of structural weaknesses that had caused persistent inability to compete on equal terms with peers in the region. “Kenya has displayed goodwill in the operation of the safeguard, for instance by allowing importation of sugar from some member states in excess of the allocated quota,” Comesa spokesman Mwangi Gakunga said. He said during the extension Nairobi was expected to provide more market access based on the deficit and quotas already set by the Council of Ministers....

Arusha — The process to establish four key institutions that will support the proposed East African Monetary Union (Eamu) has started, the East African Community (EAC) has said. The four institutions include the EAC Monetary Institute, the EAC Statistics Bureau, the EAC Financial Services Commission and the EAC Surveillance, Compliance and Enforcement Commission. Speaking here recently, the EAC secretary general, Mr Liberat Mfumukeko, said the process to lay the foundation for establishment of a monetary union were on gear. "The dream is to have east Africans trade easily using any of their currencies and eventually have an East African common currency," he said in his maiden press conference recently. He said the four institutions envisaged were needed because the establishment of a strong Monetary Union will require a robust institutional framework to ensure compliance and safeguard the convergence process. The EA Monetary Protocol was signed in Kampala, Uganda in November 2013 during the EAC Heads of State Summit after negotiations which started in January 2011. Once in place, the Monetary Union, whose protocol has ever since been ratified by the five member states of the Community, would promote and sustain a zone of sound monetary policy and prudent fiscal policies to reinforce the monetary policies. The roadmap of the Eamu provides for its establishment over ten year period, time within which, the single currency shall be realized. At the same time, the exchange rate policy shall have a convergence phase and the conversion of exchange rates formulated. Mr Mfumukeko, who...

THE European Union (EU) trade relations with Tanzania remain strong despite UK exit, the EU Managing Director for Africa, Ambassador Koen Vervaeke said in Dar es Salaam yesterday. He said after the UK exit, the trade volume between Tanzania and EU will be affected to a certain extent, but then UK has to define its position vis a vis EU as part of the negotiations that will also affect its relations with other countries. Tanzania is a large recipient of EU aid, channelled through the European Development Fund (EDF) to among others, advocating pro-poor growth and improving economic governance and business climate. "EU is a traditional partner of Tanzania and has accompanied for decades and hope to continue building confident and strong relationship for a win-win situation," he said. He said some positive things are being witnessed in the country, particularly the fight against corruption, efforts to industrialise and lift masses from abject poverty. "EU is fully and strongly supporting the industrialisation drive that will impact on job creation and robust economic growth," he said. On Economic Partnership Agreement (EPA), he said there is hope to conclude it soon, although Tanzania was still reflecting on it but EU is really convinced that the treaty is an opportunity for Africa and Tanzania to capitalise. On his part, the EU Head of Delegation to Tanzania and East Africa Community (EAC) Ambassador Roeland Van De Geer said there are healthy trade relations between Tanzania and the EU. He said the value of trade...