The African Continental Free Trade Area (AfCFTA) was signed on 21st March 2018 in Kigali, Rwanda, by 44 out of the 55 African countries, and brokered by the African Union (AU). This agreement was born of the realisation that total trade exports from Africa to the rest of the world are estimated at USD 760 billion; however, this is mostly in the form of raw materials and thus prevents Africa from deriving the true value of such exports. Considering that African exports to the world make up only 3% of the total world trade value, there exists much scope for improvement. No wonder then, in a 2020 report, the World Bank estimated that by 2035, real income gains from full implementation of the agreement could be 7%, or nearly USD 450 billion, while predicting that the agreement could contribute to lifting an additional 30m people from extreme poverty and 68m people from moderate poverty. Against this backdrop, it is clear that the AfCFTA has the potential to make a significant impact on improving the livelihoods of the African people, by boosting intra-African trade and generating new employment opportunities on an integrated African labour market. In a follow-up report (https://bit.ly/3wZhqmM) published in June 2022, the World Bank listed other potential benefits of the AfCFTA on labour including higher-paid, better-quality jobs, especially for women; as well as wage rises of 11.2% for women and 9.8% for men by 2035. Policymakers say that the free movement of labour will be a key contributor to the successful...

The contemporary era of regional trade across the globe is one of a complex interaction between people, companies, and organisations. Supply chains traverse countries and regions. Trade has become an everyday business, and its performance largely depends on connectivity along roads, rail, and sea, telecommunications, financial markets, and information processing. Nevertheless, despite such conspicuous knowledge of what facilitates trade, Africa’s regional trade potential remains hugely under-exploited. World Bank notes that trade between countries on the continent represents 12 per cent of the total economic activity compared to 40 per cent in Asia and 60 per cent in Europe. To help bridge this gap, African nations instituted the African Continental Free Trade Area (AfCFTA) agreement on 1 January 2021. This marked the dawn of a new era in intra-regional trade facilitation. The agreement aims to eliminate import tariffs on 97per cent of goods traded globally and address non-tariff barriers. It opens up a market of more than 1.3 billion people and is expected to boost intra-African trade while encouraging direct investment in the continent from the rest of the world. While the deal focuses on facilitating trade and services and easing the regulatory measures and technical trade barriers, a lot needs to be done. For Africa to boost intra-regional trade from the 12 per cent reported by the World Bank to the target of 20 per cent, it needs to make significant changes in technology, infrastructure, and policy reforms. For one, boosting intra-African trade requires Africa to encourage more investment opportunities...

The Africa Export and Import Bank (Afreximbank) has selected Ghana as part of a continental initiative to facilitate the creation and expansion of Export Trading Companies (ETCs) to promote intra-Africa trade under the AfCFTA. Export Trading Companies provide support services for firms engaged in exporting such as shipping, warehousing, insurance and market information among others. As a result, an ETC seminar has been held in Accra to sensitize African countries about the unique role of Export Trading Companies (ETCs) in diversifying African exports and promoting industrialization in the continent. The seminar which brought together key private and public sector actors in the continent, also discussed how ETCs are organized, operated, supported and regulated by government agencies. The Deputy Minister for Trade and Industry, Herbert Krapah said the government will play its role in providing the requisite regulation to attract private investments and partnerships in setting up ETCs. He emphasized Ghana’s readiness for vibrant trading under AfCFTA. The Deputy Minister for Trade said government is very enthused to take full advantage of the Guided Trade Initiative which is part of the AfCFTA Secretariat’s efforts to initiate commercially meaningful trade under the AfCFTA. As part of the initiative, it selected seven countries to provisionally start trading goods under the AfCFTA on a pilot basis. The countries include Rwanda, Cameroon, Egypt, Ghana, Kenya, Mauritius, and Tanzania. The AfCFTA chose these countries because their tariff offers on goods have been fully approved and officially published. Herbert Krapah revealed that, “we were in Takoradi last...

ZIMBABWE is one of only four members of Common Market for Eastern and Southern Africa (Comesa) member countries that have received capacity building support aimed at eliminating Non-Tariff Barriers on trade of common goods. This is in line with the requisite regulations of Comesa, a 21-member economic bloc whose population exceeds 583 million, entails a Gross Domestic Product of $805 billion and sees export/import trade in goods worth US$324 billion per year. Comesa forms a major market place for both internal and external trading. A Non-Tariff Barrier is a form of restrictive trade measure where barriers to trade are set up and take a form other than a tariff. In a statement, Comesa said the regulations define the roles and responsibilities of the Non-Tariff Barriers (NTBs) institutions to deliver on the intended objective to eliminate barriers across the bloc and increase intra-regional trade. NTBs include quotas, levies, embargoes, sanctions and other restrictions and are frequently used by large and developed economies. “Four member States of Comesa have received capacity building support to their institutional frameworks for elimination of Non-Tariff Barriers (NTBs) on common goods, in compliance with the requisite Comesa regulations. “Madagascar is the latest member State to receive training to support the development of a National Strategy for elimination of NTBs. “Similar training has been conducted in Zambia, Zimbabwe and Malawi,” said Comesa, adding that Egypt and Tunisia were the next in line. The training follows an earlier decision by the Comesa Council of Ministers to provide technical support...

The moment for Africa to become a serious player in global value chains is now or never. With solid political momentum behind the Africa Continental Free Trade Area (AfCFTA), we have a window of opportunity to improve regional value chains and further upgrade into Global Value Chains (GVCs). Launched in January 2021, the AfCFTA was positioned as the trade agreement to transform the economic trajectory of Africa and position the continent as a force within the Globe. The Free Trade Area brings together 55 countries with a population of over 1.3 billion, a combined gross domestic product valued at $34 trillion and is estimated to bring over 30 million people out of poverty. Since its launch, the AfCFTA Secretariat has made progress, the most recent being the launch of the Rules of Origin manual and e-tariff book in July 2022. Africa barely trades with itself currently. According to an UNCTAD report, Africa interregional trade currently stands at 15 percent compared to 47 percent in America, 61 percent in Asia, and 67 percent in Europe. Africa and Asia are the only continents with rising interregional trade since 2008, providing us with an opportunity to turn the tide. The AfCFTA can accelerate this growth by developing regional value chains as a foundation for Africa’s participation in Global Value Chains. Africa’s integration into manufacturing value chains is also dominated by export of primary products with only 1.9 percent of global manufacturing taking place in the continent. The Economic Complexity Index (ECI), an indicator...

The COVID-19 pandemic is disrupting Africa’s development trajectory. It is exacting a substantial socio-economic toll and putting the survival of half of the continent’s micro, small and medium-sized enterprises (MSMEs) at risk. Four in five African businesses are witnessing a dramatic reduction in sales. As African countries restart their economies and phase out COVID-19 restrictions, the ripple effects of the Ukraine crisis increase daily. The effects are particularly acute in terms of food security, given the continent’s reliance on food imports from the region of conflict. In addition, the rising cost of fertilizers and the impact of climate change are exacerbating food shortages. These shocks have slowed progress towards achieving SDG2, which is zero hunger by 2030. A 2021 joint publication by FAO, the United Nations Economic Commission for Africa (UNECA), and the African Union titled, Africa: Regional Overview of Food Security and Nutrition indicated that over one-fifth of the continent’s population faced hunger in 2020. That is about 281.6 million people—46.3 million more than the figure for 2019. Due to the current harsh economic realities in countries, the International Monetary Fund is encouraging governments worldwide to subsidize the cost of food and energy for their poor. Such a social intervention presents a huge fiscal challenge for many African countries. What then is the solution? An effective solution is to boost intra-African trade, which has the potential to pave the way to food security. Africa has enough food to ensure its citizens do not face hunger; however, the challenge is...

The African Continental Free Trade Area (AfCFTA) agreement which was approved in 2021, provides a unique opportunity to boost growth, cut poverty, and reduce Africa’s dependence on the boom-and-bust commodity cycle. The agreement further seeks greater regional economic integration and a more significant contribution by African countries to global trade. According to the 2020 report by the World Bank on Making the Most of the African Continental Free Trade Area: Leveraging Trade and Foreign Direct Investment to Boost Growth and Reduce Poverty, AfCFTA will cover 55 member countries, with a continental population of 1.3 billion people and a combined annual GDP of $3.4 trillion. When fully implemented, it is estimated the agreement could boost the region’s income by $450 billion annually and provide new opportunities, including trade, agriculture, manufacturing, e-commerce, cultural and transport sectors. Trade In particular, Annex 4 to the AfCFTA treaty aims to simplify and harmonize international trade procedures and logistics to expedite the processes of importation, exportation and transit; and expedite the movement, clearance and release of goods, including goods in transit across borders within State Parties. This simplification is important for Africa to maximize potential gains from the AfCFTA, which is made clear by looking at the high trade costs of crossing borders on the continent. As the map below illustrates, many African countries have borders ranking at the top of the most restrictive in the world as measured by the costs of cross-border trade.   Transport For historic reasons, bilateral and regional trade in Africa has been hampered...

Digitalization brings new opportunities in trade and creates the potential to underpin resilience in times of crisis. The digital transformation of African customs and borders could improve efficiencies in processes and yield trade gains on the continent of US$20 billion a year. With digital trade in place, pre-existing bottlenecks in infrastructure can be tackled, efficiencies can be leveraged, and innovative solutions can be harnessed. However, countries in Africa vary greatly in their readiness for digital trade.  In African countries where economic resilience must be fostered, jobs must be created and, entrepreneurship skills must be facilitated, digital trade must be in full swing.  How digital automation is easing the flow of trade  Thanks to technological advances, importing and exporting goods and services in Nigeria has become easier thanks to the rise of online international trade administration portals. These online portals automate the experience for many stakeholders, including customs officials, businesses importing finished goods and raw materials for manufacturing, and those exporting their goods across the globe.  Blockchain technology, Artificial Intelligence (AI), state-of-the-art payment solutions, fraud detection and prevention, and warehouse management solutions are helping to increase the ease of trade, streamlining border management, and identifying and potentially overcoming issues that impact timeframes, logistics and transportation.  Using a platform of this type, such as Webb Fontaine’s Single Window for Trade, provides clients with a wide spectrum of up-to-the-minute information, including trade formalities, import and export procedures, latest tariff codes and rates, as well as fee simulation features. Businesses can fill in pre-arrival...

Trade by the SA Customs Union (SACU) within the African Continental Free Trade Area (AfCFTA) is expected to start in a few months. Read original article

Standard Bank Africa says Namibia finds it easier to trade in Africa than the rest of the world. According to the Standard Bank Trade Barometer report for June 2022, Namibia had the highest score of 27% compared to 10 other countries in the “very easy” section in Africa against 13% for the rest of the world. However, it is not only Namibia that is struggling to penetrate international markets, as Africa’s largest economy Nigeria also finds it most difficult to trade with the rest of the world, scoring 43% in that category. “This Africa Trade Barometer report is one of the most comprehensive research reports on the state of trade on the African continent as experienced on the ground by real African businesses,” said Bill Blackie, the Standard Bank’s Business and Commercial Clients division Chief Executive. The report offers a comparative view of the enablers and challenges to facilitating trade across 10 key African markets, he added. Data were collected principally from the World Bank, although underlying data sources ranged from the International Monetary Fund and the International Trade Centre to country central banks. According to the report, tariffs are a major obstacle to trade within Africa and the rest of the world, while forex restrictions and controls are seen as less severe obstacles to trading. Notable obstacles to trading in Africa include customs and trade regulations, power outages, and customs requirements (top three obstacles). “In the rest of the world, severe trading obstacles include customs and trade regulations, customs...