THE private sector has a crucial role to play in making regional integration work for East Africa and African continent in general as they are the ones that understand the constraints facing enterprises and take advantage of opportunities in trade agreements signed by governments. According to Trade Law Centre (TRALAC), the private sector is a major engine for sustainable economic growth and development, job creation and poverty alleviation in Africa and across the world. In Africa, the private sector accounts for 80 per cent of the total production, two thirds of investment, and three q uarters of credit, and employs 90 per cent of the working age population. In addition, 90 per cent of the firms within the African private sector are small and medium enterprises (SMEs). However these businesses’ participation in cross-border trade is limited due to tariffs, non-tariff barriers which include complex customs and trade procedures, lack of access to finance, high transportation costs and lack of access to information, among others. It is because of that the private sector is seen crucial in the implementation of the African Continental Free Trade Area which is about establishing a unified continental market with 1.2 billion potential customers and where the private sector is a major engine to make it happen. This was the tone from the discussions of the meeting held last week in Arusha about how the East African Private sector including Small and Medium Enterprises (SMEs) could benefit from the AfCFTA. The one-day meeting, organised jointly between...

As far as trading blocs go, the European Union (EU) has been a global case study of turning a free market into a common market. Faced with notable challenges in the integration process such as the consecutive crises in the Exchange Rate Mechanism in the early 90s, the EU defied all odds and continued to expand in depth and geography in a historic feat. However, only two years ago, this ideal trading bloc took a hit with the Brexit vote, which triggered a global conversation on regional trading, agreements and integration towards creating shared prosperity for the countries involved. In our own context, a snapshot of intra-East African Community (EAC) trade in the past few years will reveal tension-filled and sometimes hectic trade-relations, as well as an overall cloud of uncertainty on the future of the EAC. Yet with our geographical advantages, natural resources and global reputation, the EAC holds huge potential to set the pace for the Africa Continental Free Trade Area (AfCFTA) and lead the continent into a new age trading with the world on an equal and mutually beneficial platform. While there isn’t much comparison to be made with the EU, one indisputable thing is that their integration process was marred by political and social differences especially with bringing on board of Eastern European countries. This, many times, caused uproar in member States with populations demanding that their nations’needs come first’. Through the chaos, nonetheless, members designed new institutions with a view to open up markets and...

African industrialisation has to be among the most important things happening in the world right now. The vast continent, with a population of more than 1.2 billion people, is home to an increasing fraction of people who are still mired in extreme poverty: By 2030, the World Bank projects that almost all the people in extreme poverty will live in sub-Saharan Africa. The reason is twofold. First, Africa’s population is growing rapidly. Second, Africa has lagged in the industrialisation necessary to generate mass employment. The lack of strong, stable governments — a legacy of colonialism — has made it difficult to provide the education, infrastructure, court systems and other public goods that help prepare countries for the leap from subsistence farming to factory work. Well-meaning Western aid and international development agencies couldn’t fill the gap. Meanwhile, nations in East Asia and Southeast Asia became the world’s factories before Africa did. But late doesn’t mean never. Rising labour costs in China, and the threat of US tariffs are finally causing manufacturers to diversify their supply chains. Some of their factories will go to Vietnam and Bangladesh, two rising stars of the developing world. But those countries won’t be big enough to replace China, which means that if manufacturers really want to keep costs down, many will have to look to Africa. INVESTMENT This process is already well underway. In her The Next Factory of the World: How Chinese Investment Is Reshaping Africa, Irene Yuan Sun — a development-aid worker turned McKinsey &...

In March 2018, 44 African countries committed to the launch of a common market for Africa - the African Continental Free Trade Area (AfCFTA). Although 52 African countries have signed the agreement establishing the AfCFTA, so far 22 countries have ratified it; and 22 ratifications are needed in 2019 to enable it enter into force. The AfCFTA Agreement will enter into force 30 days after the required number of ratifications have been deposited with the AU. It is intended to bring together 55 member states of the African Union covering a market of more than 1.2 billion people and a combined gross domestic product (GDP) of more than $3.4 trillion. It will be the world’s largest free trade area since the formation of the World Trade Organisation in terms of participating member states. The Economic Commission for Africa (UNECA) suggests that the AfCFTA has the potential both to boost intra-African trade by 52.3 per cent (by 2022) by eliminating import duties (90 per cent), and to double this trade if non-tariff barriers are also reduced. The current intra-Africa trade fluctuates between 15 and 18 per cent only. There is a debate on what this means for African countries, with optimists arguing that the new agreement creates a fertile ground for the development of stronger and more productive economic ties, while the skeptics dismiss it altogether. This undertaking includes commitment by member states to progressively eliminate tariffs and non-tariff barriers to trade in goods and liberalise trade in services; cooperate on...

In the recently released World Economic Situation and Prospects for 2018 report, Africa’s economic growth for 2019 is projected at 3.4%, a marginal increase of 0.9% from 2018. What do countries need to do to accelerate economic growth? Low productivity is a problem. There must be higher uptakes in innovations and new technologies to propel productivity in the agriculture and small-scale enterprises. Agricultural modernization in most countries is low, as it is still rudimentary, not capitalized and not commercialized. This means we have a huge potential there. The continent’s economies are vulnerable to the volatility of commodity prices in the global market. That’s why diversification is the solution. Africa must diversify its agricultural products, and add value to its primary commodities and exports to avoid exporting its jobs to the rest of the world. In 2003 African leaders met in Maputo, Mozambique, and agreed to invest at least 10% of their national budgets in agriculture. Only a few countries have met that commitment. Why is this so? Fifteen years after the Maputo Declaration, only seven countries—Burkina Faso, Ethiopia, Niger, Mali, Malawi, Senegal and Zambia—have consistently met this target. In fact, countries like Malawi even went beyond the target, achieving as high as 21% in 2013 compared to the average of 3.1% for sub-Saharan Africa. Several factors account for underinvestment in agriculture in Africa. The implementation of the Structural Adjustment Programme in Africa reduced agriculture financing; low international funding of agriculture weakens policy space for agricultural spending; low political will to...

At their meeting in Arusha this week, members of East Africa Business Council (EABC) who teamed up with UN Economic Commission for Africa (ECA) said they foresee large potential gains from the AfCFTA, including an increase in intra-African exports of Eastern Africa by nearly US$ 1 billion and job creation of 0.5 to 1.9 million. “Together African economies have a collective gross domestic product of U$2.5 trillion, making it the 8th largest economy in the world. That makes the continent much more attractive to investment, both from within and from outside the continent,” said Andrew Mold, acting Director of ECA in Eastern Africa. “This should encourage business people to take advantage of AfCFTA and make the investments necessary to sustain economic growth and create employment,” Mold added. EABC Chairman, Nick Nesbitt emphasized the importance of the continent having a clear vision to put an end to the fragmentation of the internal market. “I really applaud everybody who has been involved in creating the AfCFTA because their vision is the one of pan-Africanism.,” Nesbitt said. “It is something our founding founders aspired to. Our thanks to ECA for being at forefront of this conversation and pushing the agenda forward so that the continent becomes a single economic trading bloc,” he added. Speaking at the same gathering, Director General of Customs and Trade at East African Community Secretariat, Kenneth Bagamuhunda cited the experience of regional economic communities as the building blocks for the AfCFTA. “The AfCFTA should build on what has already...

COMESA, to which Uganda is a member, has become the first regional trading bloc to launch an online seed label verification system in Africa and globally. The system will assist the region eliminate cases of fake seed and boost trade in quality and improved certified seed. The region has also scored another first by introducing COMESA Regional Certificates to be issued by National Seed Authorities and this is also expected to boost seed trade in the 21 countries. Pedigree Global Strategy Director Mr Selorm Branttie has since commended COMESA for the launch which has been done through the Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA) Seed programme. He was speaking at the COMESA Secretariat during the two-day training held on 24th – 25th April 2019 for seed companies on ordering, use and trading using the COMESA Seed labels and Certificates. “This is the first time that seed certificates and verification of the seeds will be done electronically, and the farmer will be able to trace the source of the seed and authenticity of the seed without difficulty,’’ Mr Branttie added. He emphasized the need to eliminate the trade and use of fake seed saying it has greatly contributed to the poor performance of 80 million small-holder farmers and food insecurity in the COMESA region. Mr Branttie, who conducted the training, said the seed labels and certificates will promote the use of genuine seed and eventual elimination of fake seed from circulation. ACTESA is implementing this programme through...

East African business community leaders on Friday called for concerted efforts to fast-track the realization of the African Continental Free Trade Area (AfCFTA). East African business leaders, who have been convening on the potential benefits of the AfCFTA for the private sector under the umbrella of the UN Economic Commission for Africa (ECA), on Friday urged for the realization of the continental free trade pact, the ECA said in a statement on Friday. The ECA, which brought together some 40 key East African business leaders on Thursday in collaboration with the East African Business Council, in meeting outcome statement issued Friday revealed that the region's business community representatives' common position, reiterating their support to the ambitious free trade pact. "The AfCFTA is not simply a free trade agreement. It's about establishing a unified continental market with 1.2 billion potential customers and where the private sector is a major engine to make it happen," private sector leaders said after the meeting. The ECA, which stressed "large potential gains" from the free trade pact, also projected an estimated a 1 billion U.S. dollars increase in the exports of eastern African countries, as well as close to 1.9 million new job opportunities in the region. Once operational, the AfCFTA is projected to boost the level of intra-Africa trade by about 52 percent by the year 2020, according to figures from the ECA. The AfCFTA, which was launched in Kigali, capital of Rwanda, in March 2018, mainly aspires to create a tariff-free continent that...

The push to boost intra-regional trade, cross-border investment and economic integration in Africa has reached a pivotal phase. This April, Gambia became the 22nd country in the continent (Kenya was among the first ones) to ratify the Africa Continental Free Trade Agreement, helping the historic trade deal gather the minimum required ratifications to come into full effect. Signed last year in Kigali, the capital of Rwanda, the AfCFTA presents Africa with a golden opportunity to unleash the power of its industries, create jobs for the masses of unemployed youth and fast-track development. Most rich industrialised countries started the regional integration journey in the 1960s, meaning that their industries have enjoyed access to larger markets outside national borders for close to six decades. This head start in cross-border trade and investment explains why industries in these countries enjoy crucial competitive advantages such as economies of scale and specialisation. When firms produce at scale, which is possible if they have easy access to markets outside their national borders, they not only manage costs better and hence get more profitable, but also find it easier to specialise in one area. Firms become better at making any product they specialise in, allowing them to build comparative advantages, price their products more competitively and create well-paying quality jobs. The push to boost intra-regional trade, cross-border investment and economic integration in Africa has reached a pivotal phase. This April, Gambia became the 22nd country in the continent (Kenya was among the first ones) to ratify the...

The regional business community on Thursday held discussions in Arusha, Tanzania about how the East African Private Sector, including Small and Medium Enterprises (SMEs), could benefit from the African Continental Free Trade Area Agreement (AfCFTA). The meeting largely observed that the AfCFTA is not simply a free trade agreement since it is about establishing a unified continental market with 1.2 billion potential customers with the private sector regarded as a major engine to make it happen. The one-day meeting was organised by the East African Business Council (EABC) and the UN Economic Commission for Africa (ECA). Close to 40 key players from the region’s private sector attended. Early this month, the trade deal got the minimum required ratifications after the Gambia became the 22nd country to ratify it. Nick Nesbitt, EABC Chairperson, emphasised the importance of the continent having a clear vision to put an end to the fragmentation of the internal market. “I really applaud everybody who has been involved in creating the AfCFTA, because their vision is one for pan-Africanism. It is something our founding founders aspired to,” Nesbitt said. The United Nations Economic Commission for Africa Eastern Africa Sub-regional office estimates large potential gains from the deal. These include an increase in intra-African exports of Eastern Africa by nearly $1 billion and job creation of 0.5 to 1.9 million. “Together, African economies have a collective GDP of 2.5 trillion USD, making it the 8th largest economy in the world. That makes the continent much more attractive to...