| FAIZEL ISMAIL | The African Continental Free Trade Area was launched two years ago at an African Union (AU) summit in Kigali. It was scheduled to be implemented from July 1, 2020. But this has been pushed out until 2021 because of the impact of COVID-19 and the need for leaders to focus on saving lives. Studies by the International Monetary Fund (IMF), the United Nations Economic Commission for Africa and others state that the free trade area has the potential to increase growth, raise welfare and stimulate industrial development on the continent. But there are concerns. Some countries, particularly smaller and more vulnerable states, could be hurt. For example, they could suffer revenue losses and other negative effects from premature liberalisation. The impact of COVID-19 will only worsen these structural weaknesses. The Economic Commission for Africa has reported that between 300,000 and 3.3 million people could lose their lives if appropriate measures are not taken. There are several reasons for this level of high risk. These include the fact that 56% of urban dwellings are in overcrowded slums, 71% of Africa’s workforce is informally employed and cannot work from home and 40% of children on the continent are undernourished. Africa is also more vulnerable to the impact of COVID-19 because it is highly dependent on imports for its medicinal and pharmaceutical products and on commodity exports. The latter include oil, which has suffered a severe collapse in price. Other contributing factors are high public debt due to higher...

The COVID-19 pandemic is expected to hit African economies extremely hard. According to the World Bank biannual Africa’s Pulse report, as a result of the pandemic, economic growth in sub-Saharan Africa will decline from 2.4% in 2019 to between -2.1% and -5.1% in 2020, depending on the success of measures taken to mitigate the pandemic’s effects. This means that the region will experience its first recession in 25 years. The decline will be primarily due to large contractions in South Africa, Nigeria, and Angola driven by their reliance on exports of commodities whose prices have crashed as well as other structural issues. This will inevitably affect Africa’s participation in trade and value chains as well as reduce foreign financing flows. Given the limited regional market, trade with the rest of the world is vital for Africa. Before the pandemic, Africa’s trade with the rest of the world has been showing good momentum. According to UNCTAD’s Economic Development In Africa 2019 report, in the period of 2015-2017, total trade from Africa to the rest of the world averaged $760 billion in current prices, and the share of exports from Africa to the rest of the world ranged from 80% to 90% in 2000 –2017 in Africa’s total trade. The only other region with a higher export dependence on the rest of the world is Oceania. However, intra-African trade, defined as the average of intra-African exports and imports, was around 2% during the period 2015–2017, and the intra-African exports were 16.6% of...

Rwanda’s revenue collection is projected to reduce to Rwf1.4 trillion ($1.5 billion) in the 2020/2021 financial from Rwf1.6 trillion ($1.6 billion) projected in the 2019/2020 revised budget, as a result of the Covid-19 pandemic which has halted the economy since March. Taxable avenues in travel, hospitality, entertainment, and tourism were all halted, while disruptions were felt in supply chains that support export in mining, agribusiness and textile. Due to these Covid-19 related disruptions, non-tax revenue is also expected to decline to Rwf184.3 billion ($197 million). The fall in revenues will drastically hamper public development projects and force the government to seek more foreign aid and assistance to foot its annual budget. Minister of Finance, Uzziel Ndagijimana, told parliamentarians that the proposed Rwf3.2 trillion ($3.4 billion) total government budget for fiscal year 2020/2021 will have to be supplemented by grants worth Rwf492.5 billion ($526 million) and external loans of Rwf783.4 billion (about $837 million). Source: The East African

Senior Rwandan officials and their counterparts from the Democratic Republic of the Congo (RDC), on Thursday, May 27 agreed on a set of mechanisms to revive cross-border trade despite the Covid-19 outbreak. The senior officials met in Rubavu District at La Corniche One Stop Border Post a closed door meeting that lasted over five hours. The Rwanda delegation was made of Health Minister Dr. Daniel Ngamije, Trade and Industry Minister Soraya Hakuziyaremenye and Local Government Minister Prof. Anastase Shyaka among other officials. The DR Congo delegation comprised Innocent Bokele Walaka, the deputy minister for internal affairs, the deputy minister of health – Dr. Albert M’PETI Biyombo and the Governor of North Kivu Province, Carly Kasivita Nzanzu among others. In their remarks, officials from both sides noted that the bilateral meeting was made possible thanks to the political will by heads of state of the two countries. On the agenda, the senior officials discussed collaborations towards improving public health in the two countries. The purpose of the meeting, according to officials, was to formulate proposals for high-level political commitments meant to guide the strengthening of cross-border cooperation in surveillance of Covid-19 pandemic and its implication for cross-border trade in compliance with the specific measures taken by either country. The bilateral meeting was held after both countries closed their borders two months ago, as a measure to contain the spread of the virus. The decision, while it was important for public health, significantly affected informal cross-border traders who are dominated by women from both countries. The...

Since the first case of Covid-19 was reported in the Great Lakes region in mid-March 2020, small scale traders have been unable to cross borders as they have traditionally done either to buy or sell goods. The regional supply of primary agricultural commodities, most of which are traded under the Simplified Trade Regime (STR), especially foodstuffs from surplus to deficit areas has also been disrupted by the long delays at borders as truck drivers wait to be tested for Covid-19 before crossing. To support cross border trade, which is the lifeline of a huge community in the region, the Great Lakes Trade Facilitation Project (GLTFP) engaged stakeholders to come up with innovative means of trading across the borders of the three countries covered by the project. These innovations are meant to ease the movement of goods and avoid food shortages. The project region covers eastern DR Congo bordering western Rwanda and Uganda. Subsequently, a new concept of bulk-buying has been developed whereby goods are procured in large consignments in collaboration with suppliers across the borders. This ensures there is no mass movement of traders crossing the borders. Led by the Cross-Border Traders’ Associations (CBTA),  this concept has helped traders minimize the risk of COVID- 19 spread and allow safe trade. It consists of packaging similar goods from either side of the borders and moving them across the border using joint means of transport. This limits the movement of people to a strict minimum. Only the driver conveys the goods accompanied...

Dar es Salaam — The Southern African Development Community (Sadc) is gearing up for a full reopening of cross-border trading. This comes after experts in the region expressed satisfaction over the precautionary measures countries within the 16-member bloc have taken to prevent further spread of the novel coronavirus which causes Covid-19. The move comes after about 50 days when the body adopted its regional guidelines for harmonising and facilitating movement of critical goods and services across the region during the Covid-19 pandemic. The guidelines, adopted after a meeting of the Sadc Council of Ministers on April 6, 2020, aimed at limiting the spread of Covid-19 through transport across borders; facilitating the implementation of transport related national Covid-19 measures in cross-border transportation and facilitating flow of essential goods such as fuel, food and medicines. The guidelines also sought to limit unnecessary and mass movement of passengers across borders and harmonising and coordinating transport-related national Covid-19 policies, regulations and response measures. But with some countries - including Tanzania - making some important milestones in their fight against Covid-19, a virtual meeting of experts met yesterday to draw the roadmap for a meeting of Sadc Council of Ministers today (Thursday, May 28) resolved that some things must now change. "This meeting is being held in preparation for a meeting for the Sadc Council of Ministers. Key on the agenda that we will be presenting to the Sadc Council of Ministers is that some of the issues that we knew about Covid-19 must now...

Delegations from Rwanda and Democratic Republic of Congo (DRC) have met to enhance trans-border cooperation in order to strengthen #Covid-19 surveillance and trade between the two countries. Officials from both countries met this Thursday in Rubavu district in Western Rwanda, making the first face-to-face meeting since the coronavirus pandemic outbreak in Rwanda, March 13. Both parties met to discuss and agree on concrete measures to control coronavirus spread especially with their cross border trade activities. The Rwanda team was led by Rwanda’s minister of Health, Dr Daniel Ngamije and consisted of ministers of local government, trade and industry, Professor Anastase Shyaka and Soraya M. Hakuziyaremye respectively. Ngamije said that the objective of the meeting is for both countries to share common understanding on fighting the Covid-19 pandemic since both share a common border and cross border trade must continue across all sides. “Trade between both countries is needed but during this coronavirus pandemic we have to put in place measures, like compulsory Covid-19 testing so that we can control the virus spread across  the borders,” Ngamije said. The discussion with DRC comes just after Rwanda and Tanzania have also agreed on a common ground to test and control coronavirus spread which is currently significant among cross border movements especially with truck drivers. The DRC team, led by Internal minister, Innocent Bakole Walaka, said that his country has been equally affected by the coronavirus crisis which called for closure of border activities and putting in place strict measures. “Even with these...

Plans by the government to transport all transit cargo from the Port of Mombasa to Naivasha Inland Container Depot (ICD) through the Standard Gauge Railway (SGR) effective June 1, have elicited protest from road transporters. They have termed the move as a deliberate plan by the government to “kill” the economy of Mombasa. Last Friday, the government directed that all transit cargo be moved and cleared at the Naivasha ICD for delivery to Uganda, Rwanda and South Sudan. Kenya Transporters Association (KTA) chief executive Dennis Ombok accused the government of overlooking them during decision making on cargo transport matters. The government said in a statement on Friday 22, that some of the cargo will be moved on the old metre-gauge railway directly to Tororo in eastern Uganda or Kampala, while fuel will be transported by pipeline to Kisumu, Kenya and thereafter by water through Lake Victoria to Portbell in Luzira, Kampala or Jinja. Ombok dismissed the government’s claims that transporting cargo by railway is cheaper than using trucks. He made the remarks during a joint briefing convened by Muslim for Human Rights (Muhuri) in collaboration with Okoa Mombasa lobby group. Hidden costs “The government does not want to tell the public the hidden costs of using the SGR to ferry containers. If Uganda says its comfortable with cargo going by road, why is the government forcing this mandatory cargo transportation through SGR?” posed Ombok. Now, the Kenya Long Distance Truck Drivers Association (KLDTDA) has threatened to mobilise its members to...

The domino effect of the coronavirus pandemic will plunge many economies into recession and means the African Continental Free Trade Agreement (AfCFTA) is now needed more than ever to ensure that member states are trading with each other and supporting one another at this time, according to Banji Fehintola, senior director and head of treasury at the Africa Finance Corporation (AFC). He says South Africa has a very important part to play. It is the most industrialised and diversified economy on the continent and is one of the only financial markets that is sound enough to be tapped for infrastructure projects. “Trade finance and infrastructure finance are incredibly important in the creation of growth across Africa. However, since the global financial crisis of 2008/2009, some global banks have retreated from emerging markets, including Africa. These means credit capacity from global banks for African Financial Institutions (FI) has reduced considerably, constraining their ability to serve clients’ needs,” he tells Fin24. No amount of policy change or cuts in taxes will truly make Africa competitive when the physical hinderances are ignored, according to Fehintola. He says the AfCFTA is not just a dream, but there is a long way still go before it becomes a tangible reality. The next phase comprises a new set of challenges as the ratifying countries commence implementing the AfCFTA with the goal of truly unlocking Africa’s potential through the free movement of goods, services and people. He points out that the elimination of tariff and nontariff barriers...

The Economic Commission for Africa (ECA), the African Development Bank (AfDB) and the African Union Commission (AUC) launched the second Africa Regional Integration Index (ARII 2019). The Index includes a call to action to African economies to deepen their integration. The Africa Regional Integration Index 2019, which builds on the first edition published in 2016, provides up-to-date data on the status and progress of regional integration in Africa. It also helps to assess the level of integration for every Regional Economic Community (REC) and their member countries. The report observed that although 20 countries score above average, no African country can be considered well integrated into its region. Even the most integrated country, South Africa, scores 0.625 out of 1, less than two-thirds of its potential on the scale. The report found that much more needs to be done to integrate regional economies to make them more resilient to shocks such as the current COVID-19 pandemic. Overall, the Index shows that levels of integration on the continent are relatively low with an average score of 0.327 out of 1. “Whereas the Index edition we are releasing today has data cut off points in 2019, the present COVID-19 pandemic has reopened the question of whether enough is being done in advancing regional integration as a means to help Africa withstand systematic shocks such as the one being experienced today,” said Stephen Karingi, Regional Integration Division Director at the ECA. “This index is both a measurement exercise and a call to action;...