The U.S. ditched the Trans-Pacific Partnership, while across the Atlantic, the U.K. is trying to extract itself from the European Union and its single market. But while free trade is under threat in much of the world, African countries are heading in the other direction: the continent is on track to create the largest free trade agreement by population that the world has seen since the 1995 creation of the World Trade Organization. That organization has 164 member countries. On May 30, the African Continental Free Trade Area (AfCFTA) will become a reality. All but three of Africa’s 55 countries have signed up, creating a free trade area that covers more than a billion people and a collective GDP of over $2 trillion, and includes most of Africa’s largest economies, including South Africa and Egypt. If hold-outs Benin, Eritrea and Nigeria—Africa’s largest economy—join in, that’s a total of 1.2 billion people and $2.3 trillion in GDP. By way of comparison, NAFTA and the EU-Japan free trade agreement each cover a collective GDP of around $22 trillion. But even when added together, they don’t cover as many people as the AfCFTA will if every African nation joins. Here’s what you need to know about the deal that could transform Africa’s business landscape. What’s the goal? Trade within Africa is in a dire state. A mere 17% of African countries’ exports go to other African countries—compare that with intra-regional trade levels of 59% in Asia and 69% in Europe. That means Africa doesn’t feature...

THE East African Community (EAC) Leather Forum has urged the bloc to create readily accessible market for leather products. The forum has called for EAC to fast track the implementation of Regional Leather Strategy. The forum was convened by the East African Business Council (EABC) and brought together over 40 industry champions in leather manufacturing from Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda. The forum has recommended for the creation of a readily accessible regional market for leather products and a conducive business environment to promote regional value addition in the leather sector. According to World Bank Kenya Leather Industry - Diagnosis, Strategy and Action Plan, Leather and Leather products are among the most widely traded agro-based commodities in the world. The industry has a global estimated trade value of over US$ 150 billion a year, more than five times that of coffee. Despite owning about 15 per cent of the world's cattle population, Africa accounts for only eight percent of the world production of cattle hides and four per cent of world leather production. Speaking at the opening session, Mr Christophe Bazivamo, EAC Deputy Secretary General (Productive and Social Sectors), said the EAC Secretariat and the Partner States have prioritised the development of the Leather Sector Value Chain for job creation and as a means of providing affordable, new and quality options for leather products to the citizens. The 19th Ordinary Summit held in February 2018 in Kampala, directed the Council to put in place mechanisms that support...

The Common Market for Eastern and Southern Africa (COMESA) and United National Conference on Trade and Development (UNCTAD) have today launched a Co-delegation Agreement to implement trade facilitation projects in the region. UNCTAD Secretary General Dr Mukhisa Kituyi and his COMESA counterpart Chileshe Kapwepwe launched the Agreement Friday at the COMESA Headquarters in Lusaka, Zambia. Under the Agreement, COMESA delegates to UNCTAD the design and development of national and regional Trade Information Portals (TIPs) and the Customs Automation Regional Centre (CARC). The two activities are worth 3 million euros and will be funded from an 85 million euros kitty provided by the European Union to COMESA under the 11th European Development Fund Trade Facilitation Programme. Out of this amount, 68 million euros will be used to implement trade facilitation and small-scale cross border trade. The TIPs will facilitate easy access to essential trade information in one platform while the CARC will support technical and functional training on the Automated System for Customs Data (ASYCUDA) World Platform thereby improving skills to develop and use applications. This is in addition to developing the latest ASYCUDA Applications to enhance trade facilitation systems at the national, regional and continental levels. COMESA Secretary General said the co-delegation was informed by UNCTAD’s experience and expertise in promoting trade facilitation, and capacity in modernizing Customs Administrations, and ASYCUDA being its intellectual property. “I am confident that UNCTAD will deliver the expected outcomes as enshrined in the Co-delegation Agreement,” she said. In his address Kituyi said the engine...

The African Infrastructure Guarantee Mechanism’ was organised as part of the 3rd African Pension Funds and Alternatives Investment Conference. It was well attended by an audience mostly composed of industry players – private pension fund administrators, trustees, asset managers, government pension funds and development finance institutions. This grouping clearly demonstrates the interest to develop such initiatives to scale up greater investments in the African infrastructure space. The session was moderated by Dr Morgan Pillay Senior Infrastructure Finance Expert from GIZ, who presented the objectives of the AUDA-NEPAD session. To objectives were; to gauge the appetite of institutional investors (pension funds) for the implementation of the African Infrastructure Guarantee Mechanism and discuss its financial potential; and to make use of the Pension Fund conference platform to consult on what can make the concept a reality. This includes possible implementation strategies and concrete action steps towards scaling risk mitigation and an African Guarantee Scheme to enable the mobilisation of African pension fund investment for African infrastructure. The session panel, with representatives from the AUDA-NEPAD, the African Development Bank; the Development Bank of Southern Africa and the Trade and Development Bank gave its interpretation of the African Infrastructure Guarantee Mechanism as instrument of risk mitigation. Industry players were requested to give their thoughts on how the development of such initiative could bring value in facilitating alternative investments in the African Infrastructure space. Deliberations included working with development partners in the development of similar initiatives such as the African Development Bank and its co-guarantee...

The 45th East African Community Consultative Meeting aimed at improving Air Transport in the region was held in in Naivasha, Kenya. The EAC Consultative meeting on facilitation of Air Transport is a forum for discussion on issues that affect air transport in the region in order to comply with Annex 9 (Air Transport Facilitation) and Annex 17 (Aviation Security) of the Chicago Convention on International Civil Aviation. The meeting refers to the ICAO international standards and recommended practices and proposes appropriate recommendations to be implemented by the Partner States at the various EAC international Airports.  It is hosted by EAC Partner States, twice a year on rotational basis. Addressing the delates from the EAC Partner States, the Principal Secretary in the Republic of Kenya’s State Department of Transport, Ministry of Transport, Infrastructure, Housing, Urban Development and Public Works, Ms. Esther Koimett underscored the importance of EAC Air Transport facilitation forum in ensuring the smooth movement of passengers, goods and aircrafts at all EAC international airports. The Principal Secretary urged Partner States to continuously respond to emerging challenges in order to cope with aviation and non-aviation demands as well as strive to meet international standards. She reminded the participants that Air transport plays a key role in the promotion of trade, tourism and economic growth of the region. “Air Transport facilitation is an important aspect of aviation and the EAC airports have to continuously enhance capacity of existing infrastructure to be able to cope with future aviation demands, meet international requirements and...

The various stakeholders described the formulation of the Transshipment SOPs as a key milestone for shipping. The adoption of a bidding SOPs, they explained, will play a key role in raising efficiency levels at the Port of Mombasa. The SOPs have been developed to international standards and will enhance the transshipment process by removing process bottlenecks that have previously occasioned cargo clearance delays. It is expected that inter-agency relations at the Port of Mombasa will be streamlined with clear performance targets and processes. They will provide clear timelines to each party and emphasise the provision of adequate resources to clear transshipment cargo expeditiously. Mombasa Port handled 12,189 Twenty-Foot equivalent unit in transshipment in April 2019, an increase of only 2 per cent from April 2018. This is expected to increase rapidly in future with the implementation of the SOPs. Source: Capital Business

The Standard Gauge Railway (SGR) is losing out business from tea firms because of the exorbitant transport rates from Nairobi to Mombasa. Tea firms, especially the multinationals, have now opted to use road in transporting millions of kilos of tea arguing that it is 60 percent cheaper than using the train. The move is likely to further complicate the loan repayment for the SGR. Apollo Kiarii, the chief executive of Kenya Tea Growers Association (KTGA), said the last mile connectivity involved in transportation of the tea and the revised cargo rates have made the use of SGR too expensive. “We have reached a point whereby we have decided to abandon the use of SGR because it does not make any economic sense to us given its expensive nature,” said Mr Kiarii. Source: Business Daily

Issues like negotiations on key instruments and more ratification numbers have to be achieved for effective implementation of the African Continental Free Trade Area (AfCFTA) Agreement, Rwandan experts told Xinhua recently, as the African Union (AU) Commission set a time frame to activate the AfCFTA agreement on May 30. According to the AU, the remaining work for the AfCFTA is for the AU and African ministers of trade to finalize work on supporting instruments to facilitate the launch of the operational phase of the AfCFTA during an extra-ordinary heads of state and government summit on July 7. These instruments include rules of origin, schedules of tariff concessions on trade in goods, online non-tariff barriers monitoring and elimination mechanism, digital payments and settlement platform and African Trade Observatory Portal. Permanent Secretary of Rwanda's Ministry of Trade and Industry Michel Minega Sebera said the implementation can't be effective before negotiations on some key implementing instruments, including rules of origin and tariff concessions are completed. Despite the fact that the required 22 ratifications for the AfCFTA agreement to enter into force have been reached, the rest of African countries should join for its effective implementation, said Sebera, who is also an expert in international trade and development industry. Nigeria, Africa's largest economy, has so far opted not to ratify the agreement. Over 50 percent of the continent's cumulative GDP are contributed by Egypt, Nigeria and South Africa, while Africa's six sovereign island nations collectively contribute just 1 percent, according to reports. African countries...

African policy makers, Regional Economic Communities, African business leaders and others are set to hold a two-day policy dialogue in Addis Ababa, Ethiopia to map out a strategy for successful implementation of the African Continental Free Trade Agreement (AfCFTA). The May 27-28 policy dialogue is co-organised by the AU and the Coalition for Dialogue on Africa (CoDA), a 10-year old development platform for discussions and reflections, for stakeholders to map out a strategy for implementation of trade agreement and therefore lead to the realization of Africa’s aspiration enunciated in Agenda 2063. AGENDA 2063 is Africa’s blueprint and master plan for transforming the continent into the global powerhouse of the future. A concept note on the upcoming policy dialogue indicates that: “The planned policy dialogue will further enhance stakeholder engagement on the implementation of the AfCFTA.” It also aims to: build knowledge and expertise of all stakeholders on priority trade issues of the AfCFTA; improve regular information flow on trade issues to key stakeholders, and suggest a framework for the establishment of AfCFTA national committees; and improve co-ordination among relevant government ministries and agencies including through clear mandates and assigning of responsibilities. Improving the participation opportunities for stakeholders in the work programme of the AfCFTA; and strengthening the culture of dialogue and inclusiveness, are the other specific goals of the policy dialogue. The AfCFTA was first signed by African leaders on March 21, 2018, in Kigali. Among other benefits, experts estimate that the AfCFTA will increase intra-African trade by over 50...

Kenya’s dependence on commodities has worsened, a new United Nations Conference on Trade and Development (UNCTAD) report has shown, pointing to increased exposure to price shocks. Kenya’s commodity exports as a share of total value of merchandise exports rose to 72 percent in 2017, from an average of 67 percent of the value between 2013 and 2017, the new report shows. It is also above the 71 percent posted in 1995. This means that Kenya is more vulnerable to negative commodity price shocks and price volatility. UNCTAD Secretary-General Mukhisa Kituyi called for diversification of the economy to lower dependence on commodities. “Given that commodity dependence often negatively impacts a country’s economic development, it is important and urgent to reduce it to make faster progress towards meeting the sustainable development goals,” said Dr Kituyi. Commodity dependence can affect economic growth and welfare in the short and medium terms as it increases the vulnerability of countries to price shocks. UNCTAD considers an economy to be dependent on commodities when the share of its commodity exports in total merchandise sales is more than 60 percent. According to the UNCTAD report, commodity-dependent countries have increased from 92 between 1998 and 2002 to 102 between 2013 and 2017, being the highest level in 20 years. Kenya’s commodity exports were valued at $4.148 billion (Sh419.5 billion), equivalent to 5.2 percent of gross domestic product (GDP). This is down from 9.7 percent of GDP in 1995 when earnings totalled Sh132 billion. Agricultural commodities take up 61 percent...