Despite a steady increase in coffee consumption around the world, trade prices have fallen dramatically in the past three years, hitting producers. At the same time, the cost of an espresso or latte remains as full-fat as ever. What's going on? Futures on arabica and robusta, the most widespread varieties of coffee, have fallen 40 percent since the beginning of 2017 and are now at historically low levels. This is largely because of bumper harvests in Brazil, the world's main coffee producer. But at the same time, consumption has grown by an average of 2.1 percent a year for the past decade, according to the International Coffee Organization (ICO). Two billion cups of coffee are drunk every day, according to Fairtrade International, which works to improve the lot of farmers through better pricing and conditions. The crisis in prices is beginning to create "real structural problems" for producers, said Valeria Rodriguez, a manager at fairtrade organisation Max Havelaar France. "The consequences are terrible - they can no longer support themselves, invest in production or prepare for the challenges of climate change," she said. Supplier woes In Central and South America, many smaller producers in Africa and Latin America are giving up in particular those who grow arabica, which is more difficult to produce than the robusta variety favoured in Asia, according to Jack Scoville, a futures markets analyst with Price Group. A similar trend is observable in Africa for reasons ranging from high production costs in Kenya to insecurity in...

The African Development Bank (AfDB) will use its newly ramped-up capital base to help boost private sector investment on the continent and invest in infrastructure projects that support the African Continental Free Trade Area (AfCFTA). These are some of the plans the bank has for the additional $115bn (R1.7-trillion) recently approved by its shareholders, according to the bank’s vice-president for finance and CFO, Bajabulile “Swazi” Tshabalala. At the end of October, the bank’s shareholders agreed to more than double its capital base, the largest increase in the bank’s history, taking the total to $208bn. “We are looking to do more private sector activities and investments in support of the African continental free trade agreement because you need companies to actually trade with each other,” she said. The bank will also ramp up efforts to support African entrepreneurs, particularly women and young people. Tshabalala was speaking on the sidelines of the Africa Investment Forum, which closed in Johannesburg on Wednesday. The forum is designed as a deal-making platform and marketed 56 transactions from across the continent to international and regional investors. Investment interest was secured for deals worth $40.1bn, up from the previous year’s $38.7bn. The capital boost will provide the bank with “additional risk capacity” to support and crowd in investment by the private sector, particularly in low-income and fragile countries that have been neglected in the past, she said. This will include the use of instruments that help mitigate risks for private investors, including the bank’s co-guarantee platform. The...

Damali Ssali. There are several factors that influence the value and volume of trade. However, tariffs on tradeable goods and services are one of the most significant factors. International trade grew dramatically in the second half of the 20th century. As an example, total global trade in 2000 was 22 times greater than it had been 1950. This increase in multilateral international trade occurred when trade barriers, especially tariffs, were significantly reduced or in some cases eliminated across large trade blocks in Asia, America and Europe. Tariffs are taxes levied on imports and exports between states with the aim of generating government revenues and protecting domestic industries. Sometimes, depending on the tax policy of the country, a tariff could be set as high as 60%. This is usually to protect a young industry that is considered as very important to that state. Other times tariffs are imposed by states, against products and services of another state, to settle scores. The current trade war currently going on between the United States and China is one such tariff war waged between states. In 2017, the United Nations Conference on Trade and Development reported that tariffs, on tradeable goods and services, between the developed states averaged at 1.2%. This is low compared to the average tariffs, on tradeable goods and services, between African countries, which stand at 8%.  Moreover, tariffs remain relatively high in important sectors, including agriculture, apparel, textiles and leather products. Unfortunately, these high tariffs make it easier for African countries to...

That’s the main conclusion from a new report Africa’s Development Dynamics  Achieving Productive Transformation, published by the African Union (AU) and the OECD on November 5. As it stands, productive transformation is not taking off, especially in the employment-intensive sectors where it is most needed, the report finds. Far from catching up, Africa is falling further behind emerging markets in Asia. The Africa-to-Asia labour productivity ratio has decreased from 67% in 2000 to 50% today, the report finds. African exports of consumption goods to African markets decreased between 2009 and 2016, both in dollar terms and relative to the continent’s GDP. “Without a strong and co-ordinated policy push,” the report says, “African firms risk losing out to new global competitors.” About 42% of Africa’s working youth live on less than $1.90 a day and only 12% of Africa’s working-age women were in waged employment in 2016, according to the report. The number of people on that income level increased by 31 million between 1999 and 2015 to 407 million. In some countries, almost 91% of the non-agricultural labour force remain in informal employment. The annual total of 29 million new entrants to Africa’s labour markets risks becoming a cumulative addition to the jobless total. If jobs for them are not found in one year, they will need to be created the next year. Clusters key Many entrepreneurs lack basic capabilities, the report finds. Most youth entrepreneurs in Côte d’Ivoire and Madagascar lack skills in areas such as bookkeeping, multi-year planning and human resources. The AU and...

A STANDARD gauge railway (SGR) project that will link Rwanda, Burundi and DR Congo with the Dar es Salaam port is one among major projects that will feature in the Africa Investment Forum that begun in Johannesburg yesterday. The President of African Development Bank, the organiser of the forum, Dr Akinwumi Adesina said the SGR project currently being undertaken by the Tanzania’s government using local resources would be on the table in the forum that has brought together global multilateral development and finance institutions and investors to tackle the continent’s infrastructure investment challenges and advance Africa’s economic transformation agenda. The three-day Africa Investment Forum billed a game-changer to tilt capital flow into the continent has been organised by the African Development Bank and partners in Sandton Convention Centre to advance projects, raise capital and close financial deals. Around 2000 delegates were expected to attend the innovative investment marketplace which has brought together heads of state, project sponsors, pension funds, sovereign wealth funds, institutional investors in 60 boardroom sessions to move projects from commitment to action. And the organisers of the forum are adamant that it will not be a talk shop but a unique platform to close financial deals for major projects that will boost economic growth and development in the continent. Africa Investment Forum is not a talk show. We deliver,” said Dr Adesina at the opening ceremony. “We promised (during the inaugural forum last year) and we delivered. We’re changing the investment narrative of Africa.” “When we laid...

$3tn GDP growth opportunity if the African Continental Free Trade Area (AfCFTA) is fully implemented Biggest potential economic gain and business opportunities will be from from growth in trade between African nations Countries with open economies and significant cross-border trade set to benefit most quickly South Africa, Ghana, Côte d'Ivoire, Kenya and Morocco will grow most from AfCFTA Conflicts with older regional free trade agreements a major hurdle Manufacturing among sectors with biggest growth opportunities Success dependent on African countries putting rules, regulations and mechanisms in place around Rules of Origin, digital payments and the elimination of non-tariff barriers. New research from global law firm Baker McKenzie and Oxford Economics – AfCFTA's US$ 3 trillion Opportunity: Weighing Existing Barriers against Potential Economic Gains - shows that if fully implemented, the African Continental Free Trade Area (AfCFTA) will unlock significant but uneven growth opportunities on the continent. The African Union is putting the Africa Continental Free Trade Area (AfCFTA) into operation. It will be the world's largest free trade area by number of countries and is so far in force across 27 countries. Open economy key to success Some countries are currently better placed than others to reap the rewards of intraregional trade and numerous obstacles mean that the tangible benefits of the agreement will likely only be realized from 2030. The report finds countries with good existing trade integration with their neighbours and which have open economies are most likley to benefit economically from lower trade tariffs. For example, South...

Vera Songwe, the Executive Secretary of the UN Economic Commission for Africa (UNECA), on Tuesday last week opened the 23rd meeting of the intergovernmental committee of senior officials and experts from 14 eastern African countries in Asmara, Eritrea insisting on the importance of increasing regional trade and implementing the African Continental Free Trade Agreement (AfCFTA). Leveraging new opportunities for regional integration was the theme of the ECA annual meeting. In the eastern trading Africa bloc, she said, the implementation of the continental free trade agreement could result in $1.8 billion welfare gains and creation of 2 million new jobs. The New Times’ James Karuhanga caught up with Songwe to talk about, among others, why the historic agreement is not just another trade agreement, what the meeting’s host country – which was hosting the meeting for the very first time – has to offer, and the importance of the continent’s aspirations for peace and harmony. Excerpts: In the discussions on leveraging new opportunities for regional integration in eastern Africa, the AfCFTA keeps coming up again and you particularly emphasised that this is not just another trade agreement. Why? Like I said, this is not just another agreement because it actually is, if it is taken right, a stepping stone for huge investment compact for the continent. The Continental Free Trade Area Agreement is, on paper, a policy statement but I think when you translate that policy statement into actuality, it means that we need to create industries, develop infrastructure, build roads, make our airlines...

President Yoweri Museveni has urged African countries to promote trade as one of the strategies that will ensure the survival of the continent and the prosperity of the people. “Today, Africans must know that trade is a matter of survival. If you don’t trade, you will collapse because prosperity comes from trade,” he said. The President was opening the Uganda-Democratic Republic of Congo (DRC) joint Business Forum at Munyonyo that is running under the theme ‘Promoting Bilateral Trade for Mutual Peace and Prosperity’. The one-day conference was attended by business delegations from  Uganda and neighbouring Democratic Republic of Congo (DRC) as well as the line Ministers from the 2 countries. It is taking place as DRC President  Felix Tshisekedi starts a two day state visit to Uganda. The Governor of Beni in the DRC, Nyonyi Bwanakawa and that of Ituri also in the DRC, Jean Bamanisa Saidi, among others, were also present at the business forum. President Museveni, who warmly welcomed the DRC delegation to Uganda informing them that we are one people divided by the colonial boundaries, said trade in the region started  very many years ago. “Congo and East Africa have been trading since time immemorial,” he observed. The President cited products that were being traded from the Indian Ocean coast such as textiles, glass, beads and guns in exchange with the interior areas that included such products like copper, ivory, iron and cows. Museveni asserted that by facilitating trade, a number of challenges are resolved including job creation,...

Amr Kamel, the executive Vice President in charge of Business Development and Corporate Banking at the African Export-Import Bank (Afreximbank), has said they are ready to work with African banks and bankers and to ensure that the banks are well-equipped to deal with the risks in financing trade under a difficult politico-economic environment and changing trade counter-parties. Kamel was speaking at the Afreximbank Trade Finance Seminar and Workshop which was attended by more than 200 participants, including senior executives from African banks, financial institutions, regulatory institutions. It was organised by Afreximbank in collaboration with the South African province of Kwazulu-Natal. The training had been structured to ensure that participants acquired the capacity to structure bankable trade finance deals of varying levels of complexity, he stated. “As Banks, we all play a critical role in promoting trade,” said Mr. Kamel. He said that 2019 would go down as a watershed in Africa’s history, being the year when the continent came together to affirm its commitment to addressing its economic and social problems through the launch of the operational phase of the African Free Trade Continental Agreement (AfCFTA). “This should provide traders across Africa with preferential trading arrangements to enable them to enhance the level of intra-African trade and enhance economic growth for our countries,” he said. Also speaking, Sihle Zikalala, Premier of KwaZulu-Natal Province, said that the province aimed to position itself as the gateway to South Africa and the entire Southern African region. It aspired to act increasingly as a...

COMESA and Trade Mark East Africa (TMA) have signed a Memorandum of Understanding (MoU) to promote trade in the region by removing obstacles that impede the smooth flow or trade among the Member States in the region. Working closely with international and regional organizations, such as Trade Mark East Africa, national institutions, the private sector and civil society organizations, this will enable promote trade by unlocking the economic potential of the COMESA region through increased physical access to markets, enhanced trade environment and improved business competitiveness. The MoU marks an important milestone in providing a framework of cooperation and partnership between the two organizations in areas of common interest. These include market access, development or border post infrastructure, improvement of trade environment through trade facilitation and inclusion of the private sector as key players in economic development. The pact was signed by the Trade Mark East Africa Executive Director Frank Matsaert and COMESA Secretary General Chileshe Mpundu Kapwepwe at the COMESA Secretariat. "We are getting into this partnership to ensure that through policy formulation, creation of trade facilitation tool which are automated as well as standards and non-tariff barrier (NTB) removal so that business people, whether SMEs or large enterprises get the benefits," Mr. Matsaert stated. Secretary General indicated that jointly, COMESA and TMA will implement trade facilitation initiatives in the region through application or respective regional and international instruments. In particular, support will be provided to Member States to implement the World Trade Organization Trade Facilitation Agreement. The partnership between the two...