The tectonic plates of the global political economy are shifting, and with an accelerating pace: “Trade wars”; “Brexit”; “fake news” and election manipulation; “populism”; the appointment of a “geopolitical commission” in Brussels; unprecedented protests in Hong Kong; South China sea military confrontations; an increasingly assertive Chinese Communist Party—the list goes on. Facing these dramatic changes, smaller, relatively fragile, states, particularly those in Africa, need to build new reference points to anchor their future development or risk being swallowed in the emerging crevasses. Rather than focus on current events Africans need to discern their underlying drivers and how they frame opportunities, as well as responses. The modern world economy is now characterized by a rapidly shifting technological frontier within which several previously distinct realms are now converging. Sub-Saharan Africa could benefit from the increasingly interconnected global economy. At the same time, the United States’ tough response to China’s growing economic heft, as well as increased worldwide backlash to globalization, is incentivizing some economies to look inward. Trade policy and strategy is back in focus with a vengeance, and increasingly contested. How might an Africa caught in the middle of these opposing forces navigate this new global trade environment while maintaining its growth momentum of the last two decades? Trade integration is creating opportunities for growth Under the “Fourth Industrial Revolution” the world of work is transforming, placing ever-higher premiums on skills, curtailing the significance of geographic distance as a main shaper of production patterns, and promoting structural transformation. This new, more...

Africa, despite being a rich continent endowed with vast natural resources, is still lagging behind other regions of the world when it comes to industrialisation. Member countries still export commodities in their raw form and get next to nothing for these commodities and at the same time spend billions in scarce foreign currency to import finished goods for consumption by their people. African countries are failing to trade among themselves due to ineffective manufacturing industry, even in the wake of the coming on board of the African Continental Free Trade Area (AfCFTA) earlier this year. It is against this background that senior journalists, business writers, and experts from across the continent, as well as experts and representatives from partner organisations this week, met in the Ethiopian capital Addis Ababa, to interrogate how the continent can move forward and industrialise. Organised by the Industry Division in the Department of Trade and Industry of the African Union Commission, the meeting sought to build media awareness on the Accelerated Industrial Development of Africa (AIDA)’s framework and related strategies. As we have previously mentioned, Africa continues to part way with its raw minerals and buying them back as finished products for a high fee from international markets. Exports from the continent remain dominated by unprocessed or minimally processed products, mainly from the agricultural and mineral sectors, resulting in very low-value returns. It should be noted that Africa’s Regional Economic Communities namely the Southern Africa Development Community (SADC), East African Community (EAC), the Economic Community...

A report of the recently concluded high-level conference on trade integration notes that there is a downward trend on the profile of the East African Community (EAC) as an attractive investment destination. The report calls for the EAC Partner States to market EAC jointly, further consolidate free trade by eliminating individual State exemption lists, liberalize and allow free movement of trade and services, eradicate non-tariff barriers (NTBs), fully harmonize the Common External Tariff (CET) and domestic taxes and make business immune from politics. To enhance competitiveness, the reports say EAC needs to reduce the cost of production, and stop relying on duty exemption arrangements like AGOA. Cost of production can be lowered by managing labour, energy, logistics and cost of inputs, like raw material. “Partner states should play complementary roles in ensuring that the region does not continue being the market of finished goods from other regions, but also a producer of goods for export,” it says. However, delegates at the conference noted that there has been remarkable progress made on the EAC regional integration pillars namely the Customs Union, the Common Market, the Monetary Union and the Political Federation. Among them, the Customs Union is regarded as most successful notably with the implementation of common legal instruments and trade facilitation programmes across the region including the Single Customs Territory, One Stop Border Posts, Authorized Economic Operator Programme and the Customs Business systems interconnectivity. The conference that was held in Nairobi, Kenya from September 25-27, 2019 was held to commemorate...

The African Heads of States and Governments pose during African Union (AU) Summit for the agreement to establish the African Continental Free Trade Area in Kigali, Rwanda, on March 21, 2018. The focus now is on how to bring on board all signatories and push for ratification by all. PHOTO | FILE | NATION MEDIA GROUP With the July 1, 2020 launch of the African Continental Free Trade Area (AfCFTA) fast approaching, 90 percent of outstanding issues on the rules of origin and tariff guidelines have been resolved. A meeting of director-generals of Customs, revenue authority officials and trade experts from member states, held last week in Kampala Uganda, focused on how to bring on board all signatories and push for ratification by all. The AfCFTA agreement came into force in May 2019 after ratification from 27 countries. Of the 55 African countries, 54 have signed the agreement, with only Eritrea holding out. A gathering of AU heads of state is scheduled to endorse the rollout plan for the AfCFTA agreement following their endorsement in January 2020. While African customs officials say AU officials are working on persuading Eritrea to sign the agreement, chances of realising a breakthrough remain low. Eritrean government officials could not be reached for comment by press time. Source: The East African

Kenya is ranked third out of 66 economies showing best potential in future trade growth, a new report by multinational financier Standard Chartered Plc shows. The study considered improvements to physical and digital infrastructure, ecommerce and ease of doing business. Cote d’Ivoire comes on top followed by India on the list of the top 20 economies which is dominated by countries in Africa and Asia. The ranking took account of a range of variables grouped into three pillars — economic dynamism, readiness to trade and export diversity. Kenya benefited from improving business climate generally. “Côte d’Ivoire and Kenya are leading the pack and Ghana also performs well. The particularly strong trade readiness exhibited by Côte d’Ivoire and Kenya is driven by improvements to their business environments, with enhanced digital and physical infrastructure, and moves to improve their ease of doing business,” said Stanchart in the report. “Although these are smaller economies that cannot be expected to match the overall trading potential of larger trading powers, our index shows that they are progressing quickly, albeit from a low starting point.” Some of the more visible changes in Kenya have been in road and railway development, which has made it easier to move goods both within the country and to trading partners in the region. The World Bank reported this year in its ease of doing business report that Kenya was among the most improved in the past one year. The Bretton Woods institution ranked Kenya position 61 globally in 2019 –...

Africa is expected to commence trading under the African Continental Free Trade Agreement (AfCFTA) in July 2020. This gives the continent’s top diplomats, technocrats and negotiators less than a year to agree on the modalities that will govern the world’s largest free trade area since the establishment of the World Trade Organisation in 1995. Having attended the Source21 Common Market for Eastern and Southern Africa (Comesa) High–Level Business Summit held in Nairobi this past July, it was clear that the key issues that African governments need to agree on before trading begins under AfCFTA are duties, levies and Rules of Origin, which will determine the eligibility of goods and services to be traded in the free trade area. According to the Washington-based research group, Brookings Institution, intra-African exports accounted for 18 percent of the continent’s total exports in 2016, compared with 59 percent for intra-Asian exports and 69 percent for intra-European exports. AfCFTA is expected to fundamentally transform the current state of intra-regional trade in Africa by, first, phasing out tariffs on 90 percent of goods traded on the continent by 2022 and, later, helping countries build larger and more sophisticated regional value chains. To achieve these goals, a much broader and inclusive discussion that incorporates the interests and recommendations of key private sector players in Africa is needed. This is because businesses are able to channel investments into sectors where governments lacks the experience or technical expertise to succeed. Source: The East African

At the designated entry and exit border points between Kenya and its East African neighbours is an overflowing traffic of trucks and people dawn to dusk, a clear indication of thriving trade. Going by the latest statistics on revenue collection from the border, it is evident the East African Community (EAC) region's investment in joint customs initiatives is bearing fruit. For global trade to thrive, customs must play a critical role in not only expediting clearing processes, but also implementing effective controls that secure revenue, ensure compliance with national laws, and ensure border security and protection of society. The effectiveness of customs procedures enhances the economic competitiveness of a region and promote international trade. The coming together of EAC member states to harmonise customs processes is a clear path to further consolidate the goals of the Customs Union. The harmonisation of the customs processes has not only made it easier for traders to do business, but has also drastically reduced transnational crimes and enhanced revenue collection. This is mainly attributed to the implementation of Single Customs Territory (SCT). Established in July 2014, the SCT has reduced the cost of doing business by eliminating duplication of processes. It has also reduced administrative costs, regulatory requirements and the risks associated with noncompliance on the transit of goods. This is because taxes are paid at the first point of entry for all the partner states. Most One-Stop Border Posts, being one of the SCT initiative, have recorded a reduction in clearance and transit time at...

NAMANGA, Kenya/Tanzania (Reuters) - The speed limit is 110 km per hour on the new highway that Abadalla Chande uses to haul his truckload of animal feed from Tanzania to Kenya, two nations that share a common market often hailed as a model for the continent. But Chande is parked on the tarmac, caught up in a snarl of red tape. He is in a long line of trucks waiting for cargo to be scanned or for documents to be checked by officials. Kenya and Tanzania are the two largest economies in the East African Community (EAC) common market. It was set up in 2010 to allow people and goods to move freely among members, which also include Uganda, Rwanda, Burundi, and South Sudan. One of the most successful of Africa’s many trade blocs, it should be superseded by a continent-wide free trade area that will begin trading in July next year. But businessmen say the delays plaguing the East African union bode ill for the future of the unified market. “Sometimes we get to the border crossing and spend five, six days or even a week,” said Chande, who said he’d been waiting there more than a day. Behind him, police pried apart shouting drivers as hundreds of trucks slowly belched and groaned towards the Kenya-Tanzania border in Namanga town. Kenyan and Tanzanian officials say that even in a free trade area, goods crossing borders must be checked by multiple agencies including the tax authorities, plant health inspectorate, departments...

The 2019 Africa Risk-Reward Index, which awarded Kenya 6.27 points out of 10, ranked 26 countries based on investment potential. “Unlike Kenya, where ethno-regional tensions produce cyclical instability around elections, political stability risks in Tanzania are low in light of broader social cohesion under the ruling Chama Cha Mapinduzi party,” says the report. The risk-reward index is made of two pillars – rewards and risks. The reward sub-index evaluates four indications, including economic growth forecasts, economic size, structure and demographics. The economic growth outlook has the biggest weight in the reward score, as investment opportunities multiply where economic growth is strong. Kenya’s good performance is attributed to efforts to take full advantage of opportunities offered by the East African Community (EAC) by pushing for the removal of tariff and non-tariff barriers to trade, as well as pushing for free movement in the region. President Kenyatta, in his second inauguration in 2017, announced that Africans would be eligible to receive visas on arrival in Kenya and would not require their states to do the same. Ethiopia tops the rewards sub-index, with eight points, followed by Egypt (6.7), Ivory Coast (6.6) and Tanzania (6.3). Ethiopia’s high reward score is attributed, largely, to its huge market of 100 million people, as well as the process of liberalising various sectors such as telecommunications, aviation and financial services. (The report, however, points out that some of the ambitious plans being pushed by Prime Minister Abiy Ahmed have not taken off as expected.) “The timetable for telecommunication liberalisation...

There are an estimated 3.5 billion internet users worldwide with 39 percent in Africa. In Africa, Nigeria has 111.6 million internet users, Egypt 49.23 million and Kenya 51.1 million. The global average internet speed stands at 6.1 Mbps. The web traffic is largely generated through smartphones perhaps due to infrastructure development and convenience. Millennial internet users spend an average of 185 minutes on mobile internet services every day. This demonstrates the potential in the sector whether email, social networking, online search, online videos, online shopping or instant messaging. There is no doubt that internet connectivity has resulted in new business models and tremendously changed existing businesses, spurring growth and improving overall value creation. There is also no doubt that innovative use of technology translates to business transformation providing solutions for enterprises to achieve their desired outcomes. Research has shown that e-commerce has what it takes to help deliver development agenda creating new economic and social landscapes. It is now widely accepted by policymakers that e-commerce is at the centre of economic transformation. However, there are many drivers and barriers to the adoption of e-commerce. There is need to have integrated and capable infrastructural architecture to allow quality interfacing, e-readiness at national and county levels as well as digital literacy. This should be coupled with data standards because as government transfer data into information and ultimately knowledge for sustainable development, there is a possibility for misinterpretation and misuse. Appropriate security models should be implemented to ensure user confidence and healthy outcomes....