There has been a lot going on lately about the business climate in the region and the efforts necessary to locally make it more hospitable. Last week saw ministers from 26 African countries conclude a meeting in Kampala on Tripartite Free Trade Area (TFTA). Preceding this was the East African Manufacturing Business Summit in May in Kigali. The city also played host to the Common Market for Eastern and Southern Africa (COMESA) meeting last week to track implementation of the Airspace Integration Project. In the meantime, with an eye beyond the continent, the EAC Sectoral Council of Ministers of Trade, Industry, Finance and Investment were in Arusha last month where they adopted the terms of reference of a comprehensive cost-benefit analysis of the region’s trade with third parties. The first thing to note is that the TFTA brings together COMESA, EAC, and the Southern Africa Development Community (SADC). The other thing to note is the signing on of South Africa to be part of TFTA, which added the country’s heft to the free trade area’s viability. No matter that only Egypt has ratified it, with a minimum of 14 countries required to ratify the TFTA for it to become operational. The joining of South Africa, with Mauritius and Botswana expected to sign on in short order, means that the long held dream of Africa being able to trade with itself has taken another important step towards a Continental Free Trade Area. However, to this, the recent East African Business Council...

East African states once again missed the middle-income economy status by the end of June milestone, with per capita income of between $3,956 and $12,235. Data released by the World Bank recently shows that Kenya is the only country in the region that got close to becoming an upper middle-income economy. Its economy was rebased two years ago, branding it a lower middle-income country. Tanzania, Somalia, South Sudan, Uganda, Rwanda Burundi and Ethiopia are still classified as low-income, with gross national per capita incomes of below $1,045. Kenya has been ranked as a lower middle income economy with per capital of between $1,006 to $3,955, in the same category with Congo, Nigeria, Sudan and Egypt. Angola is one of eight countries in the world and the only African country that has moved from upper middle-income to a lower-middle income. Angola’s drop is a reflection of the structural economic shocks the country has faced as a result of the decreased oil prices and commodity prices in general. Individual governments in East Africa have been struggling to meet key growth targets under their long-term development blueprints in efforts to achieve middle income economy status. Kenya has Vision 2030, Uganda has formulated Vision 2040, Tanzania Vision 2025, Burundi Vision 2025 and Rwanda has Vision 2020, but there are plans to align all of them to the EAC’s Vision 2050. Though East African governments have laid down elaborate visions for their countries, the pace of execution remains largely unco-ordinated and execution has been relatively...

Rwanda, Tanzania and Uganda say their stance to phase-out used clothes imports should not result in their ejection from the US preferential trade programme. Senior officials from the three East African Community (EAC) countries, in Washington Thursday, opposed the move by a US trade lobby to restrict their eligibility status for the African Growth and Opportunity Act (Agoa). The Secondary Materials and Recycled Textiles Association (Smart) filed a petition with US trade authorities in March urging that the three countries, along with EAC member Kenya, be deemed ineligible for Agoa's allowance of duty-free textile and apparel exports to the US market. Lawrence Bogard, Smart's lawyer, said during Thursday's US government inquiry that the association's member companies would suffer major losses in jobs and revenues if the EAC ban on used-clothing imports is fully implemented. Partial loss Mr Bogard also argued that Kenya should be included among the EAC countries facing partial loss of their Agoa benefits. Top US trade agency had announced last month that Kenya would be spared review of its Agoa eligibility. The decision was said to be based on “recent actions Kenya has taken, including reversing tariff increases, effective July 1, 2017, and committing not to ban imports of used clothing through policy measures that are more trade-restrictive than necessary to protect human health.” But the Smart lawyer argued that Kenya ought to be included in the Agoa eligibility review until Nairobi clarifies its commitments. Smart specifically seeks confirmation that Kenya's reported imposition of minimum tariffs on containers...

Tanzania, Uganda and Rwanda are defending their decision to raise tariffs on imported secondhand clothes, saying it is based on current value, trade realignment and that —for Rwanda— it’s a one-off. The three countries are reacting to calls by a US business association to restrict their eligibility for the Africa Growth and Opportunity Act (Agoa). Together with the East African Community Secretariat, they have written to the panel of the out-of-cycle review, comprised of representatives of six US government agencies: the Departments of Commerce, Labour, Treasury and State, as well as the US Agency for International Development and the Office of the US Trade Representative. The review could decide if the three countries should lose some of the benefits of Agoa. Tanzania and Uganda, in their submissions, insisted that the doubling of levies on imports of used clothing, from $0.20 to $0.40 per kilogramme, was for realignments with the current value. Tanzania’s Trade Permanent Secretary Adolf Mkenda said increase or decrease of tax, duties and fees is a fiscal decision, which is implemented as part of annual fiscal measures. Tanzania also argued that the EAC decision to phase out importation of secondhand clothing and leather is yet to be implemented, meaning claims about loss of jobs by the Secondary Materials and Recycled Textiles Association (Smart) cannot be justified. “There is no scientific proof that changes in the trade pattern and other macroeconomic variables, including jobs and shipping were caused by the EAC decision as pointed out in the petition and...

Twenty-six African countries are rapidly moving towards finalising a preferential trade agreement which will open up significant opportunities for South African exports. The countries being integrated into a tripartite free trade area (TFTA) — seen as a critical driver of regional integration on the continent — have a combined population of 625-million people and a total GDP of $1.6-trillion. Once the tariff negotiations are finalised, the TFTA will offer exporters preferential or zero tariffs into the markets of member countries. Department of Trade and Industry deputy director-general of international trade and economic development Xolelwa Mlumbi-Peter notes that this preferential access will provide better terms of trade than are currently enjoyed. "It means that we will be able to increase our exports and advance a developmental integration agenda and the development of regional value chains, as it would be cheaper, for example, for SA to import inputs from African countries." Currently, intra-regional trade on the continent is very low. Trade Law Chambers director Rian Geldenhuys said the progress made with the TFTA was "fantastic" and would offer huge opportunities for South African businesses if implemented, particularly as the Southern African Development Community (SADC) was largely dysfunctional in terms of the implementation tariff agreements. At this stage, the TFTA agreement consists only of the legal framework with detailed negotiations on tariffs for the different products still to be finalised. Non-tariff barriers and infrastructural blockages will be addressed at a later stage. The TFTA agreement which SA signed in Uganda last week is...

The World Trade Organization issued the text of the following remarks by Director-General Roberto Azevedo: "Good morning everybody. "Welcome to the WTO and to the 2017 Global Review of Aid for Trade. "It's great to have a full house for this very important event. I am sure we will have some dynamic and fruitful discussions over the coming days. "To start things off, we have a fantastic line-up this morning. "I am pleased to be joined today by: * "the Vice President of the Gambia, Fatoumata Tambajang, * "OECD Secretary-General, Angel Gurria, * "UNCTAD Secretary-General, Mukhisa Kituyi, * "the CEO of the International Islamic Trade Finance Corporation, Hani Salem Sonbol, * "Executive Director of the International Trade Centre, Arancha Gonzalez, * "and Senior Director at the World Bank, Anabel Gonzalez. "This is one of the biggest Global Reviews so far. "We have more than 1,500 delegates taking part from around the world. "More than 20 ministers. "And leaders from a range of international organizations. "Thank you all for joining us and for making the journey to Geneva. It is a great pleasure to host you this week. "Excellencies, "Ladies and gentlemen, "17 years ago, world leaders came together to pledge to halve extreme poverty by 2015. "They met that goal - and they did it way ahead of schedule. It remains one of the most astonishing achievements of our lifetime. And trade helped to drive much of the growth and development that led to that success. "Then, two years ago, just after the last Global Review, world leaders came together again. This time they pledged to...

TradeMark Africa and the International Organization for Migration have entered into a partnership agreement that will facilitate faster clearance of migrants at border posts. The two organizations will soon implement a border project in the Great Lakes region with roll out to other areas expected in future. The partnership will provide integrated solutions for the safe and orderly movement of people and goods across international borders. Under the partnership the organizations, in conjunction with government agencies, will provide integrated border management processes that will cover customs and standards, and also human mobility. As a trade facilitation organisation, TradeMark Africa (TMA) has enabled interventions across the 6 East African countries that contribute to boosting trade in goods and services. It has facilitated construction of 13 One Stop Border Posts and adoption of one stop controls that bring border officials from neighbouring countries under one roof, enabling those crossing the border to stop only once in the country of destination. IOM works to help ensure the orderly and humane management of migration, to promote international cooperation on migration issues, to assist in the search for practical solutions to migration problems and to provide humanitarian assistance to migrants in need. Source: Africa Business Communities

The 2017 First Quarter East Africa Trade Report issued by Maersk Line Eastern Africa - a member of A.P. Moller-Maersk - reveals that aggregate trade levels in the region have improved slightly since 2016, resulting in overall year-on-year growth of 1%. According to the company's MD, Steve Felder, in line with what was reported last year, there continues to be a noticeable disparity in performance between the two core trade corridors of East Africa. Container trade in the Northern Corridor, which serves Kenya, Uganda, South Sudan, and parts of Rwanda, expanded by 1%, whereas the Central Corridor, serving Tanzania, parts of Rwanda, Burundi, Zambia, Malawi and DRC, saw a contraction of 12%. “While conditions in the East Africa region have continued to be challenging due to political instability, ongoing macro-economic headwinds and drought conditions affecting certain countries, we’re seeing healthy competition between the two corridors, both fighting for position in terms of some of the ‘swing’ countries that could export or import cargo through either corridor, specifically Rwanda, Burundi, Uganda.” The Northern Corridor While the Northern Corridor (serving Kenya, Uganda, South Sudan, and parts of Rwanda) import market experienced year-on-year growth of 6% in the first quarter, it declined slightly (by 1%) from the last quarter of 2016, says Felder. “In Kenya, liquidity is still very tight, caused by last year’s interest rate capping on the bank lending rate. In the next quarter we are expecting to see a slowdown in the import market as we approach the Kenyan elections on 8...

The east African Securities Exchanges Association (EASEA) has commended the current developments on the regional infrastructure and tasked its technical committee to fast-track implementation of the capital markets infrastructure to provide new possibilities for investors seeking cross-border trade opportunities. This was during the EASEA 29th meeting in Nairobi, Kenya on Friday that brought together regional exchanges chiefs from Rwanda, Kenya, Tanzania and Uganda. Geoffrey Odundo, the CEO of the Nairobi Securities Exchange (NSE) that hosted the meeting, said it is crucial to strengthen the region’s financial markets to attract more investors and increase their liquidity. “An integrated market is critical for attracting foreign investors and increasing liquidity of the region’s market, and as a member of the association, CDSC therefore remains committed towards achieving this key milestone,” added the Central Depository and Settlement Corporation’s (CDSC) head of ICT, James Gikonyo. Speaking at the event, Pierre Celestin Rwabukumba, the Rwanda Stock Exchange (RSE) chief executive officer (CEO), said robust and integrated markets are key to achieve the goals of the East African region’s economic development. RSE automation Rwabukumba told the meeting that RSE was in the final stages of automation of its trading infrastructure, which will automatically be linked to the Central Securities Depository (CSD) and Real Time Gross Settlement System (RTGS) at the Central Bank of Rwanda. Last year, Rwanda launched a 10-year master plan for capital market development. The plan focuses on product development, technology and innovation, capacity building and investor education, savings mobilisation for the retail investors, and...

One way to speed up Africa’s economic transformation is through deeper trade integration. Official statistics put intra-African trade at a mere 13% of the continent’s total trade. That is abysmally low. Higher volumes of intra-African trade are essential so that African countries can do business with each other more frequently and with wider margins. The merits are clear. Firms and businesses are exposed to bigger markets, new opportunities, and a larger pool of capital (including human capital) – and, ultimately, grow their turnover and returns. Consumers buy from a wider variety of products and services at a relatively cheaper cost, and attain a higher consumer welfare status. Labour benefits from skills upgrades and attractive remuneration offered by trading firms. This sets in motion a chain of other economic activities that support and spin off from regional trade. Governments also reap rewards such as a positive balance of payments, a fiscal boost from a wider tax net, and more revenue to invest in public infrastructure. This is a standard international trade position applicable throughout the world; it is therefore not surprising that regional trade deals are a core strategy in countries’ economic policies. So why are intra-African trade volumes so low and, more importantly, how can we increase it? Is it a matter of wrong or ineffective policies? Or a lack of business activity in Africa to take advantage of regional markets and build intra-African trade? I believe it is more the former than the latter, and I will explain why in...