As the strategic significance of East Africa is once again growing with new players in the region due to its significant location at the entrance of the Indian Ocean and the Red Sea, France is also back. On March 12, President Emmanuel Macron paid his first visit to the region, by visiting Djibouti, Ethiopia, and Kenya in an effort to catch up on the new developments in the region by nurturing new partnerships across the region and to break from its colonial past. In Djibouti, France’s former colony in the Horn of Africa and a country in which Thomas A. Marks has described as “France’s strategic toehold in Africa,” Macron’s visit was seen as an effort to “reassert French influence in the former colony, where China has a military base and has invested billions of dollars in infrastructure,” as Reuters reported. Djibouti, which hosted a French military base since 1932 and signed a mutual defense treaty with France in 1977, has become a military hub for other foreign powers – including the U.S., China and Japan due to its strategic location as the southern entrance of the Red Sea – a significant waterway for global commerce and for naval powers to project influence across the Indian Ocean, as well as the Near East. Countering China’s growing influence across the Horn of Africa was one of the most important objectives of Macron’s visit, as Beijing’s influence is growing in the Horn of Africa through massive investments in infrastructure projects including ports, railways, and...

Now that the African Continental Free Trade Area (AfCFTA) has come into force (see also our Brookings policy brief on the keys to success for the AfCFTA negotiations), policymakers and the business community should prioritize, develop, and implement smarter local strategies to seize the rising opportunities in manufacturing and industrialization across a variety of sectors and increase the global competitiveness of the continent. Right now, only 10 African countries (Mauritius, South Africa, Seychelles, Morocco, Tunisia, Botswana, Algeria, Kenya, Egypt, and Namibia) are ranked among the top 100 most competitive countries in world, per the 2018 Global Competitiveness Index. Given that an integrated continent will have a larger supply market, decreased trade restrictions, and free movement of people, manufacturing specialization will accelerate and make Africa’s industrialization globally competitive. As we have noted before, if the AfCFTA is successfully implemented, Africa’s manufacturing sector is projected to double in size with annual output increasing to $1 trillion by 2025 and create over 14 million jobs. Notably, one of the key objectives of the AfCFTA is to “enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.” One pathway to success will be effective AfCFTA implementation and better national ownership and alignment with Agenda 2063, the African Union’s strategic framework for the socio-economic transformation of the continent. Agenda 2063 aims at creating a “strong, united, and influential global player and partner,” turning African countries into the best performers in global quality of life measures and accelerating inclusive growth, including through industrialization, import substitution, and...

At a time when the global trade regime is under attack, the African Union (AU) is celebrating the establishment of the African Continental Free Trade Area (AfCFTA), which came into effect on 30 May. After being ratified by the required minimum 22 nations, all the member states of the AU are now legally bound to allow African goods to be traded without restraint throughout the continent. This is an impressive achievement. AfCFTA not only covers the entire continent, but has proceeded at a record pace. It was signed on 21 March 2018. Its entry into force underlines African leaders’ commitment to pan-African economic integration – a goal as old as African independence in the 1960s. Intra-regional trade has long been minimal in Africa, standing at 13% for intra-imports and 17% for intra-exports over the last seven years. Earlier continental trade initiatives, such as the 1980 Lagos Plan of Action and the 1991 African Economic Community, have lagged far behind their ambitions. However, the practical implications of the continental free trade area are not immediate. Significant work is required to deliver tangible results. Negotiations on tariffs, time lines and the seat of the AfCFTA Secretariat are still ongoing. And without effective public policies, liberalising trade risks having negative implications for many people on the continent. African trade to date Establishing regional economic communities across the continent has produced a complex pattern of overlapping but inconsequential trade regimes. The only functioning customs union on the continent remains the 109 year-old Southern African Customs Union, an imperial relic that is dominated by South Africa. The last large-scale...

Common Market for Eastern and Southern Africa (COMESA) has launched a partnership with global technology firm mPedigree to improve the agro-inputs protection technology among its members. The partnership, launched under the COMESA Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA) Seed programme, will help the bloc to eliminate faking and counterfeiting of agro-inputs materials like seeds and fertiliser among its member states. This move promises a deeper penetration into the supply chains and access to new ecosystem support for Kenya, where the technology is already in use. “The system will assist the region to not only eliminate cases of fake agro-inputs such as seeds, fertilisers and crop protection products, but also boost trade in quality and improved certified seed,” said Serlom Branttie, mPedigree Global Strategy Director. Fraudulent trade in fake agro-inputs has greatly contributed to the poor performance of over 80 million small-scale farmers and to food insecurity in the region. Source: Media Max

It is widely used in East Africa as well as the rest of the continent because of its cost-effectiveness, suitability for door-to-door delivery of goods and materials and ability to provide a very cost-effective means of cartage, loading and unloading. However it has its limitations when it comes to bulky cargo. It is expensive to transporters, consumers and even the government. Transport costs have significant impacts on the structure of economic activities as well as on trade. Empirical evidence underlines that raising transport costs by 10 per cent reduces trade volumes by more than 20 per cent and that the general quality of transport infrastructure can account for half of the variation in transport costs. On the other hand, we have railway transport is economical, quicker and best suited for carrying heavy and bulky goods over long distances. Transporters will agree that an increase in the railway traffic is followed by a decrease in the average cost. It is against this background that on-going construction of a standard gauge railway is attracting interest from land-locked countries in East Africa as it will link them with the Dar es Salaam port, their main gateway for exports and imports. They are prepared to use the line once it is completed simply because it makes economic sense. The construction of the railway line goes in line with the upgrading of the Lake ports, which border the neighbouring land-locked countries. For instance, in Lake Tanganyika ports, significant projects are ongoing to construct new facilities...

On 21st March this year, the Agreement Establishing the African Continental Free Trade Area marked one year of existence. It was opened for signature on 21st March, 2018 at an Extra-Ordinary Summit of the Assembly of African Union Heads of State and Government in Kigali, Rwanda. At that Summit, forty-four African Union Member States signed the historic Agreement. The number rose to 49 at the July 2018 Nouakchott, Mauritania Summit. Three more signatures were added during the February 2019 Addis Ababa Summit, bringing the figure to 52 as we commemorate the first Anniversary of this major milestone in Africa’s resolute use of the lever of continental economic integration to deliver prosperity to her people in line with Agenda 2063: The Africa We Want. Making the Agreement operational is as important as having signatories. While awaiting the remaining three Member-States to sign on, Africa is progressing very well in the direction of securing deposits of instruments of ratification on the Agreement Establishing the African Continental Free Trade Area. So far, 22 National Parliaments of the African Union Member-States have approved ratification of the Agreement, with 20 Member-States depositing their instruments of ratification. At this point in time, Africa is just short of two deposits of instruments of ratification to have the Agreement enter into force, thirty days after receiving the twenty second instrument of ratification. At the time of going to press, the remaining two Member States assured the Chairperson of the African Union Commission that they would shortly be depositing.[1] It has been a...

1.Nigeria With a Gross Domestic Product of $376.28 billion (Sh38.16 trillion) as at 2017, the west African country is Africa’s largest economy on top of having the largest population. The current population of 200 million based on the latest United Nations estimates makes it a powerhouse of economy and development compared to its neighbours. It has an abundance of natural resources with some of the biggest exports including oil, cocoa, and rubber. In fact, it is Africa’s largest crude oil supplier. Not to mention the rich agricultural sector responsible for 18 per cent of the country’s GDP and almost a third of employment. 2. South Africa The country has the second largest economy in Africa, with a GDP of $349.3 billion (Sh35.44 trillion). Statistics were higher than expected for 2017, seeing as the country’s economy grew by 1.3 per cent, just higher than the National Treasury’s expectation of one per cent. The highest performing industry to contribute to this growth was agriculture, followed by mining and manufacturing. A demand for manganese ore, chrome, iron ore, and anything used in the production of steel helped spur on this growth. Some of the country’s key exports include gold, corn, diamonds, and fruit.  3. Egypt The gross domestic product of the north African country, which has a long, rich trade history with plenty of ups and downs, in 2017 was $237.04 billion (Sh23.862 trillion). After the 2011 revolution, foreign exchange reserves fell considerably. Reserves fell from $36billion (Sh3.65 trillion) in December 2010 to only...

Digital economy in Africa is snowballing, and in the process it’s creating new jobs and opportunities for digital entrepreneurs to explore a larger web market. Though e-commerce represents only 0.6% of all the transactions done in Africa, as compared to 12% in the USA and 20% in China; the budding nature of the industry does rightfully make one muse on the possibility, that e-commerce is indeed Africa’s economic goldmine. Facilitation of Cross Border eTrade The global market has shrunk to a large scale, and is now enabling billions of people to sell and purchase products across borders. This has been made possible by technological innovations that have birthed online marketplaces that enable e-trade between businesses (B2B), between consumers (C2C) and between businesses and consumers (B2C). The opportunities presented by e-commerce are numerous. Africa is a massive market with a growing population of 1.28 billion people, a network of over 15 million SMEs and merchants, and a rising internet connection of 453 million users. Jumia, the leading pan-African e-commerce platform has been on the forefront of Africa’s cross border e-trade revolution. The marketplace is enabling about 81,000 active merchants across Africa, who sometimes source products from international markets, to capitalize on a huge €1.4 trillion consumer market opportunity in Africa. While the milestone has been remarkable, Nicolas Martin, EVP – Marketplace & Logistics for Jumia, noted, at the 2019 UNCTAD’s Africa Ecommerce Week, that “more needed to be done to tailor bespoke regulatory solutions for Africa to attract international investment and create...

Rwanda is looking for $1.3 billion to fund the construction of the proposed Isaka-Kigali standard gauge railway that links Rwanda and Tanzania, a senior Rwandan official said Tuesday. The figure is higher than $1.2 billion revealed during the launch of the 400 km railway line on January 20, 2018 in Dar es Salaam. "The study for Isaka-Kigali SGR is completed," said Jean de Dieu Uwihanganye, Minister of State in charge of Transport, while speaking at a local radio station talk show. "Rwanda is looking for a staggering around $1.3 billion to finance its portion with the aim of reducing logistics costs, boosting trade and easing the movement of people between Rwanda and Tanzania." Investing in transport projects is among the Rwandan government's top priorities as a way to attract investment in productive sectors, improve business environment and increase jobs opportunities, he said. Initial studies had shown that the project that will connect landlocked Rwanda to the Dar es Salaam port was estimated to cost $2.5 billion. Source: Rwanda Today

The United Nations Conference on Trade and Development (Unctad) will trade facilitation portals in Africa through a €3 million (Sh339.7 million) kitty drawn from a €85 million (Sh9.6 billion) fund by the EU to Comesa under the 11th European Development Fund Trade Facilitation Programme. Through a partnership with the Common Market for Eastern and Southern Africa (Comesa), Unctad is seeking to increase trade at the continental level by facilitating financial support to Comesa member states. Under the Agreement, Unctad will design and develop the national and regional trade information portals (TIPS) and the customs automation regional centre (CARC) at a cost of €3 million (Sh339.7 million). TIPs will facilitate access to essential trade information in one platform while CARC will support technical and functional training on the Automated System for Customs Data (ASYCUDA) World Platform thereby improving skills to use applications. This is in addition to developing the latest ASYCUDA Applications to enhance trade facilitation systems at the national, regional and continental levels. Out of the €85 million (Sh9.6 billion) EU kitty, €68 million (Sh7.7 billion) will be used to implement trade facilitation and small-scale cross-border trade. Unctad secretary general Mukhisa Kituyi sealed the agreement at the Comesa headquarters in Lusaka, Zambia. He told his host and Comesa counterpart Chileshe Kapwepwe that the regional body needs support for the spirit of regional trade and integration to bear fruit. “We are not going to downplay the centrality facilitated in trade, not only as a way of making Africa competitive but also overcoming...