Afreximbank in partnership with the AfCFTA Secretariat have launched the Pan-African Payment and Settlement System (PAPSS). The launch of PAPPS aims to boost intra-African trade by transforming and facilitating payment, clearing and settlement for cross-border trade across Africa. The platform is also expected to save Africa more than Ksh. 567 billion (USD 5 billion) annually in payment transaction costs, underpinning the operationalization of the AfCFTA. According to Afreximbank, PAPSS provides the solution to the disconnected and fragmented nature of payment and settlement systems that have long impeded intra-African trade. Prior to PAPSS, over 80% of African cross-border payment transactions originating from African banks had to be routed offshore for clearing and settlement using international banking relationships. That process posed multiple challenges including payment delays to operational inefficiencies and compliance concerns for the disparate regional payment systems. PAPSS, which has been successfully piloted in the six countries of the West African Monetary Zone, delivers among others, the following benefits. Reducing the cost, duration and time variability of cross-border payments across Africa. Decreasing the liquidity requirements of commercial banks for cross-border payments. Strengthening oversight of cross-border payment systems by central banks. Speaking at the launch event, Ghanian President Nana Akufo-Addo complimented Afreximbank and AfCFTA Secretariat for the establishment of the payment system saying, “This launch is a result of many months of hard work, resolve and commitment towards achieving set objectives for the growth of the continent in trade. All Central Banks in Africa must now join up and ensure seamless transfer of...

Summary The AfCFTA is a flagship project of the African Union (AU) Agenda 2063, Africa’s long-term development strategy for transforming the continent into a global powerhouse of the future. The African Continental Free Trade Area is the world’s largest free trade area, and the largest trade organisation since the establishment of the World Trade Organisation, bringing together 54 countries of the African Union and eight regional economic communities to create a single market. It has a population of about 1.3 billion people and a combined GDP of about $3.4 trillion. In addition to being a free trade area, the AfCFTA is a flagship project of the African Union (AU) Agenda 2063, Africa’s long-term development strategy for transforming the continent into a global powerhouse of the future. The agreement establishing the AfCFTA was signed in Kigali, Rwanda, on March 21, 2018 by 44 AU member states. Ten more countries have since signed the pact. The AfCFTA Agreement entered into force on May 30, 2019, 30 days after the deposit of the 22nd instrument of ratification, as specified in its Article 23. Trading under the AfCFTA started on January 1, 2021. Opportunities The AfCFTA market comes with many opportunities, some of which are highlight in this article. Consumer welfare gains: Consumers will have limitless choice of quality products at an affordable price. This is due to the fact that AfCFTA aims at eliminating import duties on products that are produced within Africa and thus satisfy the rules of origin. It also defines standards...

Established in 2018, the African Continental Free Trade Area (AfCFTA) represents perhaps Africa’s biggest opportunity for the next few decades in its battle against poverty of all forms; energy and infrastructure included. Against the backdrop of the tens of millions of Africans that have been plunged into extreme poverty by the onslaught of the covid-19 Pandemic, a strong case must be made for a speedy implementation of the African Continental Free Trade Area. It is projected that under the AfCFTA, extreme poverty will significantly decline across the continent. West Africa, for instance, would witness the biggest decline in the number of people living in extreme poverty; namely a decline of approximately 12 million people, which is more than a third of the total for all of Africa. But beyond extreme poverty eradication, it’s about time that the true economic might of Africa is realised through intra-African trade. Compared with Asia and Europe with 59% and 68% intra-continental trade, only 17% of exports from African countries are intra-continental (World Economic Forum), due to age-long tariff and non-tariff barriers, which the AfCFTA is essentially established to eliminate. The fact that intra-African trade constitutes only about 2% of global trade means there are significant gains to be realised if the AfCFTA is properly implemented. A continent that controls vast resources and a 1.2 billion-strong consumer market should be an economic no-brainer of a success, especially considering its young burgeoning and vibrant population. The African socio-economic and political construct under the AfCFTA dispensation must...

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum. About the author: Ratnakar Adhikari, Executive Director, Enhanced Integrated Framework (EIF) & Taffere Tesfachew, Acting Managing Director, UN Technology Bank for Least Developed Countries Limited use of technology is inhibiting LDCs’ path towards structural transformation. These countries can implement measures in several areas to build their technological capacity. Innovative approaches to resource mobilization should be explored to fund such transition. Structural transformation is the process of moving resources from low productivity to higher productivity and skill-intensive sectors, thereby setting development and economic catch-up into motion. While many countries have achieved structural transformation in a matter of decades, the least developed countries (LDCs) have been notoriously slow in this respect. One of the factors for this lack of structural transformation is LDCs’ overwhelming dependence on commodities for production and exports. According to the United Nations Conference on Trade and Development’s Commodities and Development Report 2021, over 75% of African LDCs depend on commodity production for over half of their export earnings, though Asian LDCs have a relatively diversified export basket. The report also suggests that it is extremely challenging to move away from the trap of commodity dependence and attain structural transformation. Fortunately, a combination of technology and global integration can help countries on this path. When it comes to technological advancement and its effective use, the LDCs are at the lower end of the ladder. According to the World Intellectual Property Organization (WIPO)’s Global Innovation Index 2021, which monitors the state of technological...

Summary For the first time since officially coming to power, Burundi’s President Evariste Ndayishimiye sent his Minister in Charge of EAC Affairs, Youth, Culture and Sports, Ezéchiel Nibigira, to Rwanda. The deliberations were not made public, but Rwanda announced that President Paul Kagame received the delegation and held discussions that focused on strengthening bilateral relations. The latest development, which came against the backdrop of meetings held between both countries’ political and security officials, was widely viewed as a positive move towards normalising relations. The appeasement between Rwanda and Burundi heads of state last week has signalled yet another step towards thawing of the two countries’ seven-year strained relations. For the first time since officially coming to power, Burundi’s President Evariste Ndayishimiye sent his Minister in Charge of EAC Affairs, Youth, Culture and Sports, Ezéchiel Nibigira, to Rwanda. The deliberations were not made public, but Rwanda announced that President Paul Kagame received the delegation and held discussions that focused on strengthening bilateral relations. The two countries’ diplomatic relations turned sour in 2015 when former president Pierre Nkurunziza’s regime accused Rwanda of supporting its opponents and providing refuge to individuals behind the failed coup. The latest development, which came against the backdrop of meetings held between both countries’ political and security officials, was widely viewed as a positive move towards normalising relations. Years of disputes had led to the closure of common borders in 2015, causing the collapse of cross-border communities’ trade and businesses. Restoration “I am expecting that relations will improve...

Ultimately, though, the only way to defeat poverty and graduate from aid is greatly to increase Foreign Direct Investment (FDI) – of which there is a vast potential reservoir in the world looking for the right destination, writes Peter Fabricius from the Institute for Security Studies (ISS). Ultimately, though, the only way to defeat poverty and graduate from aid is greatly to increase Foreign Direct Investment (FDI) – of which there is a vast potential reservoir in the world looking for the right destination, writes Peter Fabricius from the Institute for Security Studies (ISS). Aid remains among the most important elements of the relationship between the developed world and Africa’s least developed countries (LDCs) in particular. Africa has received more aid than any other region, an accumulated total of more than US$2,4 trillion between 1960 and 2018, according to Jakkie Cilliers in his book The Future of Africa. Yet many observers and analysts believe there has been precious little to show for it. In her 2009 book Dead Aid; Why Aid Makes Things Worse and How There is an Another Way for Africa, the Zambian economist Dambisa Moyo, asked why, despite such large aid, most sub-Saharan countries still “flounder in a seemingly never-ending cycle of corruption, disease, poverty, and aid-dependency.” Her answer was that aid is inherently bad because it creates dependency by removing much of the incentive for African countries to fend for themselves – for example by improving their tax collection systems to earn their own government revenue. It is mostly paid...

Vice President Salous Chilima on Tuesday addressed the 21st Common Market for the Eastern and Southern Africa (Comesa) summit in Egypt with a call for the regional block to move swiftly in adopting digitalisation and developing economic recovery plans following the devastation of the Covid pandemic. Chilima—who during the Sadc Summit in Lilongwe urged member states to embrace digitilisation and e-government—is representing President Lazarus Chakwera at the summit. Advertisement He said there was urgent need for Comesa to develop a robust economic recovery plan in order to build back economies because soon Covid will no longer be an excuse to people. “The Covid pandemic has reversed some of the gains that we had achieved over years in our respective countries. We, as Malawi, also have had our fair share of the negative impact that the pandemic caused on the economy,” he said. Chilima said on regional level, the value of Comesa’s total exports to the world decreased by 27 percent from $123.4 billion in 2019 to $90.3 billion in 2020, while the value of Intra-Comesa total exports declined by 11 percent from $10.9 billion in 2019 to $9.7 billion in 2020. Advertisement “What is more worrying is that the uptake of vaccines in the region is currently less than three percent. Therefore, as a response, we need to develop a robust economic recovery plan. “We need to build back. We need to build resilience. Soon Covid 19 will no longer be an excuse to our people. As a regional group,...

Industrialisation is crucial for Africa’s development and the implementation of the African Continental Free Trade Area (AfCFTA) could provide crucial impetus in the coming years. Major challenges and opportunities for Africa’s transformation model present themselves continuously. African countries have responded to Covid-19 by resorting increasingly to digital solutions but to a lesser extent with greener, fiscal measures. Prospects for African manufacturing at this year’s Africa Industrialisation Day appear brighter than last year when Africa was in the middle of the largest economic crisis for decades. While economic recovery is still slow, appropriate support linked to the implementation of the AfCFTA can boost manufacturing prospects significantly. Progress in Africa’s manufacturing performance In a paper published earlier this year, Carlos Lopes and I argued that discussions around premature deindustrialisation (a decline in the contribution of manufacturing to GDP ahead of its normal development path) were in fact premature in relation to many African countries. Taking recent World Bank World Development Indicators (WDI) data for the subset for sub-Saharan African countries, the share of manufacturing in GDP in 2020 was 12%, the same as it was in 2002, but up from as low as 9.2% in 2010. Despite the downturn in 2020, annual growth in real manufacturing value added was 3.3% over the decade to 2020 (up from 3% in the previous decade), significantly better than the 2.8% (and 1.9% respectively) annual growth for the world as a whole. Some countries have really transformed their industrial sector in recent years. Morocco surpassed South...

Du 18 au 19 novembre, autour du président de la République, des experts dans des domaines différents, des professeurs d’Universités, des banquiers, … ont inventorié des voies et moyens pour « faire du Burundi un pays émergent d’ici 2040 ».  Focus sur le secteur agricole.  Le rideau est tombé sur ce forum qui défrayait la chronique ces derniers temps. Ils sont partis avec le sentiment du devoir accompli et la conviction que le Burundi peut devenir un pays émergent d’ici 20 ans. « Les opportunités d’affaire ne manquent pas au Burundi surtout dans les secteurs stratégiques comme l’exploitation industrielle des mines, les infrastructures, l’agro-industrie, l’écotourisme, … », a déclaré le président Evariste Ndayishimiye, lors du lancement de ces assises. Le développement agropastoral serait très primordial dans ce combat. « Nous sommes un pays agricole où la pluie tombe neuf mois sur l’année et une population jeune prête à travailler. Ces atouts peuvent contribuer à l’augmentation de la production agricoles », a indiqué Christian Nibasumba, participant et représentant de TradeMark Africa au Burundi. Durant 48 heures, des exposés se sont relayés. Focalisons-nous sur celui du professeur Salvator Kaboneka, à savoir : « Comment accroître et améliorer la production agricole. ». Sans toutefois revenir sur les faiblesses du secteur, insistons sur les recommandations de cet expert pour booster le domaine agro-pastoral. D’abord, la gestion du sol. Ici, il propose le remembrement, la mise en commun et la gestion communautaire des terres. Il prône la libération des terres agricoles et la promotion de la villagisation. Au moment où, la ville de Bujumbura continue de s’étendre, le...

The Secretary General of the African Organisation for Standardisation (ARSO), Dr Hermogene Nsengimana, has called on African governments to strengthen their standards regulation agencies to position them as the springboard for economic development. He said standards played a critical role in the competitiveness of businesses and must be prioritised while the continent implemented the African Continental Free Trade Area (AfCFTA) agreement to reap the benefits of the world's biggest trade bloc. Dr Nsengimana made the call at the 65th meeting of the ARSO Council in Accra last Wednesday. The ARSO Council members, who are heads of the standards organisations of member states, have met in Accra to identify a means of facilitating seamless intra-Africa trade through harmonised infrastructure. The meeting is taking place amidst calls to accelerate the harmonisation of standards in the region to achieve the objectives of the AfCFTA. It is being held under the theme: “The beginning of trade among African countries under the AfCFTA Agreement: Boosting intra-African trade within the African single market through ‘One Standard–One Test–One Certificate–Accepted Everywhere”. Harmonisation In order to reap the benefits of the free trade agreement, Dr Nsengimana said the ease of doing business in the region must be deepened by eliminating trade barriers and harmonising standards. “When we talk about one standard, we are talking about harmonisation and we are looking at equal collaboration or mutual recognition arrangement so that we can help our private sector to trade from Ghana to Kenya or South Africa with one standard so that...