The Africa Continental Free Trade Area (AfCFTA) Secretariat and African Export-Import Bank (Afreximbank) have signed a fund management agreement to raise funding support for party states and commercial entities in the area of trade. As indicated by the secretariat, the estimated fund requirement for uninterrupted implementation of the AfCFTA agreement and to eliminate the adjustment cost is about US$10 billion over the next six years, and this agreement is to help raise funding in that regard. Speaking at the agreement-signing ceremony, Secretary-General, AfCFTA, Wamkele Mene, stated that the secretariat will not be going to World Bank or International Monetary Fund (IMF) for funding support but will depend solely on indigenous funding firms to raise the required amount to successfully implement AfCFTA. “We as Africans cannot continue to go to the World Bank, IMF, and others to finance our own trade as a continent. So, I will rather go cup in hand to Afreximbank, Trade and Development Bank, then go to the others in Europe and other parts of the world for support. We are not going to succeed in the implementation of this trade agreement without Afreximbank. This Adjustment Fund is being introduced because we know that as member countries are implementing tariff adjustment mechanisms, there would be some revenue loses in the short term and we want to ensure that their interest is accommodated. This is where the Afreximbank comes in as the pillar of implementation of AfCFTA by providing this facility of US$1billion, to make sure that we...

Originally published in the World Economic Forum Blog on 13 January 2022. Limited use of technology is inhibiting LDCs' path towards structural transformation. These countries can implement measures in several areas to build their technological capacity. Innovative approaches to resource mobilization should be explored to fund such transition. Structural transformation is the process of moving resources from low productivity to higher productivity and skill-intensive sectors, thereby setting development and economic catch-up into motion. While many countries have achieved structural transformation in a matter of decades, the least developed countries (LDCs) have been notoriously slow in this respect. One of the factors for this lack of structural transformation is LDCs’ overwhelming dependence on commodities for production and exports. According to the United Nations Conference on Trade and Development's Commodities and Development Report 2021, over 75% of African LDCs depend on commodity production for over half of their export earnings, though Asian LDCs have a relatively diversified export basket. The report also suggests that it is extremely challenging to move away from the trap of commodity dependence and attain structural transformation. Fortunately, a combination of technology and global integration can help countries on this path. When it comes to technological advancement and its effective use, the LDCs are at the lower end of the ladder. According to the World Intellectual Property Organization (WIPO)'s Global Innovation Index 2021, which monitors the state of technological advancement in 132 countries, 21 out of the 32 countries in the bottom quartile are LDCs. Of the 22 LDCs ranked altogether, only one (Tanzania) is in the second quartile....

These include visual and performing arts, crafts, cultural festivals, photography, music, dance, film, fashion, video games, digital animation, publishing, architecture, and more. Africa’s Free Trade Area (AfCFTA) is expected to be a boon for the creative sector and generate jobs for the youth. On 1 January 2021, trading under the African Continental Free Trade Area (AfCFTA) kicked off. The trade pact, which seeks to create a single market for goods and services and promote cross-border movement of capital and people, should boost intra-African trade — currently at only 18 per cent—and regional integration. It is also expected to be a boon for the creative sector. Key players in the creatives industry said as much when they met in Kigali, Rwanda, in 2019, even before the trade area launched. “We wanted to deconstruct the AfCFTA,” said Josh Nyapimbi, Executive Director of Nhimbe Trust, a pan-African creative civil society organization based in Zimbabwe, adding that the creative and cultural industries can “leverage the agreement to advance our economies.” Similarly, Wamkele Mene, the Secretary-General of the AfCFTA Secretariat, has emphasized the need for youth involvement in cross-border trade through the creative industry and technology. He says that the active participation of young people in the free trade area could boost jobs creation and catalyze economic development. Africa’s creative sector is diverse and includes visual and performing arts, crafts, cultural festivals, paintings, sculptures, photography, publishing, music, dance, film, radio, design, fashion, video games, digital animation, architecture, and advertising, according to the UN Conference on...

Summary First, Africa expects its leaders to take urgent action to speed-up access to Covid-19 vaccines, while also ensuring that health remains a permanent priority after the pandemic. Recent outbreaks of new Covid-19 variants reinforce just how interconnected the world is and why it is crucial to ensure everybody is vaccinated: a fresh breakout anywhere is a threat everywhere and no-one is safe until everyone is safe. The second priority for the AU Summit is to chart a roadmap for a resilient economic recovery post-Covid-19. The IMF estimates that Africa needs additional financing of $285 billion through 2025 just to respond to the pandemic, and at least $500 billion to get back on track to pre-Covid-19 levels of economic performance. As the African Union marks its 20th anniversary this year, there are three priorities that must top the agenda of leaders meeting at the Heads of State Summit in Addis Ababa in early February. First, Africa expects its leaders to take urgent action to speed-up access to Covid-19 vaccines, while also ensuring that health remains a permanent priority after the pandemic. The latest data shows that less than 11 percent of Africa’s 1.2 billion people have been fully vaccinated. In contrast, nearly 72 percent of high-income countries have been fully vaccinated and wealthier nations are now doling out booster shots and stockpiling vaccines for future use while Africa struggles to provide first and second doses to a fraction of the population. Recent outbreaks of new Covid-19 variants reinforce just how...

Finland Ambassador to Kenya, H.E. Pirkka Tapiola says his country is committed to doubling trade with Africa over the next decade. The ambassador spoke while touring the Port of Mombasa on Friday. The envoy commended the Government of Kenya and Development Partners for supporting Port Reforms and Modernisation Programme over the last decade that has dramatically improved evacuation of cargo at the facility. It for instance used to take 11 days to process imports through Mombasa in 2010, the time had fallen to only 5.5 days by 2017. The time to transport a container from Mombasa to Bujumbura also fell by 16.5% over the period. The Government of Finland, through TradeMark Africa has over the last decade invested more than US$13.1 million to support various projects in and around the Port of Mombasa. Finland also contributed US$445,000 to provide Personal Protective Equipment (PPE) through the Safe Trade Emergency facility by TradeMark Africa, a project that sought to keep ports, borders, and critical supply chains in the region safe for trade at the height of the COVID-19 pandemic. The Ambassador was received by General Manager Human Resources and Administration Mr. Daniel Ogutu and TradeMark Africa Deputy CEO, Allen Asiimwe.  The KPA General Manager noted that the support provided at the outset of COVID-19 was critical in keeping the port running. He further noted that port output slowed down due to COVID-19-related interruptions, calling on all stakeholders to work together to address such challenges. TradeMark Africa Deputy CEO and Chief of Programmes...

Trade education is vital to further grow exports between the UK and Africa The Institute of Export & International Trade (IOE&IT) today announced a new investment in Africa with the opening of its first international office in Nairobi, Kenya. Building on the Kenya-UK Economic Partnership Agreement the IOE&IT is developing training, education and consultancy offerings for the entire African continent – unique and specific to Africa-world trade and intra-African trade. The opening of the office builds on a successful 2021 in Africa where the IOE&IT delivered qualifications in Kenya, Ghana and Nigeria. The Institute has worked with the International Trade Centres, along with the Ghana Export Promotion Authority and Nigerian Export Promotion Council, as well as developing a Trade and Information Pipeline (TLIP) with TradeMark Africa. UK exports to Kenya in 2021 were worth £530 million and imports from Kenya totalled £579 million. The TLIP project aims to increase trade for both sides and will help create greater visibility within supply chains and simplify the facilitation of trade between the UK and Kenya. The overall aim of the TLIP initiative is to reduce logistical time constraints for businesses by around 40%, reduce the cost of compliance by 20% – potentially worth an initial saving of up to £36m to UK Exporters. Marco Forgione, director general of the Institute of Export & International Trade “We are delighted to be opening our first office outside the UK in Kenya. It is a sign of how important we believe our work in Africa...

The official start of free trading under the African Continental Free Trade Area (AfCFTA) in January 2021 moved a major continental aspiration closer to reality. One year later, cross-border trade in goods and services may not exactly be in full swing as had been anticipated, but indications are that there is some progress—the cup is half-full, not half-empty. A major hurdle is ongoing negotiations on the remaining crucial elements of the trade pact, particularly rules of origin. However, in an interview with Africa Renewal last month, the Secretary-General of the AfCFTA Secretariat, Wamkele Mene, sketched an optimistic vision of 2022. Factory workers producing garments for overseas clients, in Accra, Ghana. Credit: World Bank In sum, AfCFTA’s implementation will rev into higher gear, traders would be delighted, and the push toward accelerated industrialization of the continent should begin in earnest. Concluding negotiations on rules of origin, which is basically to determine the “nationalities” of thousands of products to prevent dumping, will be key to success. Already, negotiators have reached an impressive 87.8 percent agreement on rules of origin. That includes more than 80 percent of the about 8,000 products listed under the World Customs Organisation’s Harmonized System of rules of origin and tariffs. Such a high threshold of consensus guarantees that the vast majority of products can be traded. “What is outstanding are automobiles, textiles, clothing and sugar. These account for about 12-15 percent of what we call the tariff book. We want to conclude negotiations on these so that we can reach...

The United Kingdom (UK) at the weekend reaffirmed its commitments to channelling investments into Africa as Britain’s development finance in Africa exceeded target to hit £2.2 billion by 2021. At the second UK’s Africa Investment Conference (AIC) at the weekend, UK affirmed that Africa remains the focus for investment over the next five-year strategy period. The CDC Group, UK’s development finance institution, exceeded its 2020 commitment to invest £2 billion in Africa over the last two years with a closing mark of £2.2 billion by the end of 2021. The growth in Britain’s investments in African businesses came amidst the unprecedented upheaval caused by the COVID-19 pandemic. The CDC is owned by the UK Government and it is regarded as a champion of the United Nation’s (UN) Sustainable Development Goals. All proceeds from investments are reinvested to improve the lives of millions of people in Asia and Africa. To enhance UK-Africa partnerships, UK at the second AIC launched a new ‘Growth Gateway’ – a digital tool to link African and British businesses to UK Government trade, finance and investment services and opportunities.  The service provides practical online support to businesses in Africa that want to export to and invest in the UK, and businesses in the UK that want to export to and invest in Africa, backed up by a team of trade and investment specialists. The second AIC highlighted Britain’s strategic plan to boost economic cooperation with African nations and enhance UK’s role as the continent’s investment partner of...

Summary In its latest market summary, the International Air Transport Association (IATA) said demand for air freight has stayed above pre-crisis levels. IATA director general Willie Walsh, said data points that the cost-competitiveness of air cargo relative to that of container shipping has improved over recent months. Kenya Airways and Ethiopian Airlines have already drawn up strategies to take advantage of their respective airports which are investing on cargo segments. The battle for the air freight market share among African airlines is intensifying, thanks to Covid-19 disruptions that have driven up ocean freight rates. Many airlines are now upgrading their fleets and expanding destinations as shortage of containers in the region continues to bite. In its latest market summary, the International Air Transport Association (IATA) said demand for air freight has stayed above pre-crisis levels. “African airlines saw international cargo volumes increase by 26.7 percent end of last year, which is the largest increase of all regions. International capacity was 9.4 percent higher than pre-crisis levels, Africa is the only region in positive territory, albeit on small volumes,” read part of the IATA market summary. Cost-competitiveness Shippers Council of East Africa Chief Executive Gilbert Lagat said, apart from cost and efficiency, time to receive consignments has boosted the air freight business considering persistent road and ocean delays. “Importers consider time, cost and efficiency. If the consignment reaches on time at a moderate cost, importers will consider and with the increasing trade barriers at the borders, air freight is the best...

Afreximbank in partnership with the AfCFTA Secretariat have launched the Pan-African Payment and Settlement System (PAPSS). The launch of PAPPS aims to boost intra-African trade by transforming and facilitating payment, clearing and settlement for cross-border trade across Africa. The platform is also expected to save Africa more than Ksh. 567 billion (USD 5 billion) annually in payment transaction costs, underpinning the operationalization of the AfCFTA. According to Afreximbank, PAPSS provides the solution to the disconnected and fragmented nature of payment and settlement systems that have long impeded intra-African trade. Prior to PAPSS, over 80% of African cross-border payment transactions originating from African banks had to be routed offshore for clearing and settlement using international banking relationships. That process posed multiple challenges including payment delays to operational inefficiencies and compliance concerns for the disparate regional payment systems. PAPSS, which has been successfully piloted in the six countries of the West African Monetary Zone, delivers among others, the following benefits. Reducing the cost, duration and time variability of cross-border payments across Africa. Decreasing the liquidity requirements of commercial banks for cross-border payments. Strengthening oversight of cross-border payment systems by central banks. Speaking at the launch event, Ghanian President Nana Akufo-Addo complimented Afreximbank and AfCFTA Secretariat for the establishment of the payment system saying, “This launch is a result of many months of hard work, resolve and commitment towards achieving set objectives for the growth of the continent in trade. All Central Banks in Africa must now join up and ensure seamless transfer of...