The World Bank (WB) wants Kenya to set up an electronic trading platform for issuance of government securities in order to strengthen debt management and ensure prompt settlement of transactions. WB Country Director for Kenya Felipe Jaramillo says in the latest Country Economic update that this could also help in improving liquidity in the market. “Adopting an electronic platform could improve the primary auction of government securities. This could promote transparency and enhance efficiency in the management of government debt,” says the WB in the report. “Adoption of this technology could, for instance, hasten the settlement period after every auction and reduce liquidity management challenges.” The primary auction of Treasury bills and bonds is part of the channels through which government raises money to finance its spending plans but sometimes there are delays in the settlement period. The Kenyan government committed to a prudent management of public debt as articulated in its regularly published Medium Term Debt Management Strategy. But WB says that for this to be realised, government will have to strengthen the institutional framework for cash and debt management including adoption of this platform. Developing transparent and vibrant local currency bond market is seen as a way of spurring significant interest from foreign investors and potentially reduce country borrowing costs. In financial year 2018/19, the split or ratio between external and domestic debt in the total debt stock was about 51:49. “However, reflecting higher domestic interest rates, debt servicing charges on the domestic debt stock are about three...

The African Continental Free Trade Area (AFTA) has garnered the required 22 ratifications for it to enter force, the latest ratification coming in on April 1, 2019 from The Gambia; just 11 days after the first anniversary of the signing of the Agreement on March 21, 2018 in Kigali. What was thought unthinkable has happened. It was Nelson Mandela who said; it always looks impossible until it is done and that after climbing one great hill, you only realise you have more hills to climb. The real hard work now begins; that of Implementation, on which Africa doesn't have a very proud record. Besides, there is quite a bit of unfinished work to be done. In addition to trade in goods, AFTA covers services as well as innovation, competition and investment. Adding these areas was a stroke of genius, given the psychotic fear of these issues by many developing countries in international trade agreements, particularly the World Trade Organisation.However, way back in 2006, the African Ministers at a conference in Nairobi chaired by the then Kenyan Trade Minister Mukhisa Kituyi, now Secretary General of UNCTAD, took a fundamental decision to include these issues among programs for regional economic integration in Africa.Various services sectors are already fairly liberalised in much of Africa, such as tourism, financial, communication, computer, transport, certain professions, energy, cultural and entertainment services. This follows years of autonomous liberalisation under economic liberalism programmes, regional economic integration and participation in negotiations at the World Trade Organisation and other fora....

An African trading bloc on Thursday urged member states of three regional economic blocs to sign and ratify the free trade area agreement as the deadline nears. Three regional blocs namely the Common Market for Eastern and Southern Africa (COMESA), East Africa Community and the Southern African Development Community signed the tripartite agreement in June, 2015 in Egypt, comprising 26 countries. In a statement released after a meeting of the COMESA Intergovernmental Committee in Lusaka, the Zambian capital, the regional bloc urged member states to sign and ratify the agreement which lapses this month. The statement said so far only four countries in the three regional blocs ratified the agreement. The deadline of April 2019 was set in June last year during a ministerial meeting in South Africa, the statement added. Christopher Yaluma, Zambia's Minister of Commerce, Trade and Industry said it was time for the remaining countries to sign the tripartite given that it was supposed to be the building block to the Africa Free Trade Area Agreement. "I can not overemphasize the absolute importance of all of us ratifying the tripartite agreement so that it enters into force immediately. After years of negotiation, the tripartite free trade area is ready for implementation," he said. The Zambian minister said 93 percent of the work of rules of origin has been completed, providing the basis for trade to begin while legal texts have been concluded and adopted. Source: Xinhua

Nigeria exports rubber and crude oil to South Africa. We earn more if we export more, and this gives us more purchasing power to buy minerals from Ivory Coast and visit the Gambia for holidays. In turn, Ivory Coast can now buy fertilisers from Morocco and mineral fuels from Nigeria. By trading amongst themselves, these countries get the broadest range of goods and services at the lowest cost. This is the principle of comparative advantage and trade; rather than trying to do everything themselves, each country focuses on the products with the lowest opportunity costs. Should Africa unite on trade? A quick look at the trade profile of developing nations will show their reliance on developed nations in trading relationships. For example, 80% of Mexico’s exports go to the United States, and Nigeria’s trade with other African countries represents less than 10% of our annual trade activities. Nigeria’s story is replicated around Africa, and that is the problem that ought to be solved by the African Continental Free Trade Agreement (AfCFTA). It seeks to create a Free Trade Areawithin the continent that would reduce or remove barriers to facilitate the movement of goods and services. Previously, African countries tried to boost regional trade through international commodity agreements (ICAs). As many African countries mainly trade commodities, the idea was to establish agreements that would help stabilise export prices and commodity supply. Over time, however, ICAs grew increasingly ineffective as negotiations were driven by political rather than commercial concerns. Developing country exporters came to look at the ICAs...

The African Continental Free Trade Area (AfCFTA), an agreement trade between participating African countries , has received the minimum number of ratification needed to come into effect. This comes after Gambia signed the agreement becoming the 22nd country to ratify the deal hence effectively helping meet the minimum threshold, 12 months after the agreement was tabled in Kigali, Rwanda in March last year. The trade bloc spanning 49 countries with a combined gross domestic product (GDP) of US$3 trillion, will facilitate inter-regional trade, boost growth and help to alleviate poverty. According to a report by New Times Rwanda, meeting the minimum ratifications opens room for negotiation among signatory members on aspects and modalities of effecting it. Among the major aspects to be deliberated include rules of origin, tariff concessions, payments and settlements, non-tariff barriers and trade information among others. Its promotion of tariff-free movement of goods, people and services across the continent is also expected to favour SME’s, who account for 80% of Africa’s employment and 50% of its GDP, according to the World Bank. Due to the nature of its complexity as well as involving multiple parties, trade experts have said that there is need for governments to commence the process immediately in order to meet its implementation target of mid-2020. Once in place, the AfCFTA will cover a market of 1.2 billion people and with the multitrillion GDP, it is the world’s largest free trade area since the formation of the World Trade Organization seven decades ago. According to the United Nations...

The African continent is set for a major shift in Private Equity investment trends after a major announcement was made in Nairobi this week. During the 16th annual African Private Equity and Venture Capital Association (AVCA) conference, fund managers from around the globe, mainly the US and European markets said they are ready to deploy up to US$1 trillion for investment in the continent. This is through PE funds, a move that now places the continent at a strategic position to tap into the funds for investments in various areas. If tapped by local investment firms, the pool of funds could more than double the number and value of deals reported in the last six years, with regions such as East Africa, West Africa and Sothern Africa reaping big. “It is a plus for Africa,” said Baba Alokolaro, Managing Partner at Nigerian law firm- TNP (The New Practice),“From what we have seen, investors are taking Africa more serious than they had in the past,” Alokolaro who led a team of experts from TNP to the Nairobi event said the continent should angle itself for more deals this year, singling out Kenya as one of the countries set to benefit in East Africa. “We expect to see a lot of deals going forward. In East Africa, Kenya will remain a top investment destination,” he said. AVCA latest data shows the value of reported African PE deals between 2013-2018 was US$25.7 billion, on a total number of 1,022 deals. During the period, total...

STRATEGIC establishment of more special economic zones (SEZ) will transform and build a strong industrial economy in the region, EPZA Director General, Joseph Simbakalia has said. “Special economic zones contribute significantly to social economic development and rapid industrial upgrade in the country,” he told a delegation from Kimaka Defence College in Uganda that visited the Benjamin William Mkapa Special Economic Zone in Dar es Salaam yesterday. He said in a presentation that the special economic zones also contribute to building up industrial production output with high impact on export trade and employment. He said the EAC regional integration is an important platform that offers huge market opportunity to investors and attract more inflows of investments into the partner states for building strong industrial base. “Establishing more strategic export processing zones in the region with such a bigger market opportunity is vital and can hook more investment to benefit the economies of the partner states,” he noted. He said it was important to invest more on export processing zones to capitalise on the regional geographical advantage of the Indian Ocean mentioned in the recent studies that it will in the future control over 60 per cent of the global trade. He underscored the need of bringing onboard the participation of local private sector in order to achieve industrial sustainability and building inclusive industrial economy. For example, he said the increased manufactured export led products will definitely boost the country’s foreign exchange earnings to benefit the economy as well as making the...

Over the past three decades, sub-Saharan Africa (SSA) has seen a major restructuring in its trading relationships. Some countries, through regional communities such as the East African Community (EAC) and Economic Community of West African States (ECOWAS), have deepened trade and economic ties with their neighbors, resulting in faster and more sustained growth. Until the early-1990s, almost 90% of the SSA region’s trading counterparts were extra-regional and predominantly advanced economies, with SSA mainly exporting undiversified primary commodity products and importing consumption and capital goods. Beginning in the early 1990s, trade with advanced economies began declining rapidly and was increasingly replaced with countries in emerging Asia, including but not limited to China. Over the same period, intra-SSA trade also rose sharply and is now at its highest since records began, making the SSA region’s trade with itself the third-most important regional export destination. Despite the increase of recent decades, it is generally accepted that intra-SSA trade is still low and has significant scope for growth. Like SSA, the trading relationships of other developing regions of the world are predominantly outward looking. In 2018, intra-SSA exports accounted for 21% of total exports to the world; in developing Asian countries, that figure was also 21%. But it was lower for countries of the Western hemisphere (16%) and the Middle East and North Africa (14%). Compare this to advanced economies – which trade more with each other – with exports to other advanced economies accounting for 64% of total exports in 2018, whilst imports...

British businesses are being urged to see beyond Brexit and look to new opportunities in Africa by an architecture and engineering firm celebrating 20 years of success in East Africa. FBW Group has operations in Uganda, Kenya, Rwanda and Tanzania – but its roots are in the UK and it has a base in Manchester. It has now unveiled ambitious expansion plans across all four countries. The company’s growth plans come as the UK government works towards its ambition to be the largest G7 investor in Africa by 2022. That ambition was announced by Prime Minister Theresa May on a visit to Africa, alongside a range of measures to boost trade and encourage UK investment, including the creation of a new Africa Investors Board. An Africa Investment Summit is also planned later this year. It will bring together the UK and African governments, alongside major international investors to grow awareness of opportunities on the continent and ensure progress towards the 2022 goal. FBW Group says, regardless of its attempts to leave the EU, opportunities for UK businesses in Africa, with its young and dynamic population – set to make up a quarter of the world’s consumers by 2050 – are clear. FBW, a major player in the region’s construction and development sector, was founded in 1994 by architects and engineers working in Tanzania, including Geoff Wilks, from Stockport, who is still the chairman of the group. He arrived to work for an international company, recognized the opportunities that existed and...

With Gambia’s ratification, a massive new African free trade zone is springing into being, said a top African Union official on Tuesday. The African Continental Free Trade Area (AfCFTA) “market is being born and is one step ready for launch of its operational phase in July this year,” Albert Muchanga, African Union commissioner for trade and industry, wrote on Twitter. “The AfCFTA’s work on rules of origin; tariff concessions, payments and settlements; non-tariff barriers; and trade information are the other steps and are also progressing very well for the launch,” he added. The deal will make Africa the world’s largest free trade area created in terms of the number of participating countries since the World Trade Organization was formed in 1995. It will create a market of $3 trillion and a market of 1.2 billion people with no tariffs or border restrictions. Twenty-two countries are required to ratify the deal, and Ethiopia and Gambia took the deal over the line. Intra-African trade accounts for around 16 percent of the continent’s total trade, according to the African Union, and under the AfCFTA this could increase by half. Source: AA