African heads of states and business leaders from across the continent gathered in Rwanda's capital Kigali on Wednesday (March 21), ahead of a historic signing of the African Continental Free Trade Area (AfCFTA), an agreement that would pave the way for continental commerce. Meeting business leaders ahead of the signing on Wednesday, Rwanda's president Paul Kagame addressed delegates and reiterated the need for the treaty, which he said would boost low levels of intra-regional trade, key to the continent's economic well-being. "This agreement is about trade in goods and services. These are the kinds of complex products that drive high income economies," said Kagame. However, the event was overshadowed by the announcement that Nigeria's President Muhammadu Buhari will not be attending Wednesday's signing of the framework agreement. AfCFTA, the brainchild of the African Union was meant to be signed by all 55 members states of the AU, bringing together 1.2 billion people with a combined gross domestic product (GDP) of more than 2 trillion US Dollars. Nigeria, the continent's most populous country had been one of the foremost champions of the AfCFTA which has been in the works since 2012. Implications of Nigeria not joining Analysts say Buhari may have caved under pressure from local labour unions and big corporations who have opposed the treaty saying it would harm the local economy. Analysts say Nigeria's withdrawal from the treaty would be a huge blow to the continent, although hopes are still high that the West African giant will join in...

Three years of talks are expected to culminate in the creation of an almost $3 trillion African trade bloc on Wednesday, with the exception of one of the continent’s biggest economies. While the continent’s heads of state are gathering in the Rwandan capital, Kigali, for an extraordinary summit of the African Union to sign an agreement creating the free-trade zone of more than 50 countries, at least two presidents won’t agree to the deal. President Muhammadu Buhari of Nigeria, which together with South Africa makes up half of the continent’s gross domestic product, canceled his trip to Kigali, saying his government needs more time for input from local businesses before he can sign the pact. Ugandan President Yoweri Museveni also called off his travels to neighboring Rwanda, the Nairobi-based East African newspaper reported on Monday. Even if some don’t sign the deal yet, negotiations will continue, Trudi Hartzenberg, an executive director for Stellenbosch-based Trade Law Centre, said by phone. “The challenges will be on issues such as import tariffs and the rules of origin,” she said. Three regional groups on the continent -- the Common Market for East and Southern Africa, the Eastern African Community and the Southern African Development Community -- signed an agreement in June 2015 to create a trade bloc covering 26 countries as a precursor to the continental grouping. A week later, members of the African Union started talks for the establishment of the continent-wide free trade area. Intra-Regional Trade Intra-Africa trade stands at about 16...

At least 53 African Heads of State have gathered in Kigali for the 10th Extraordinary Summit of the AU to consider the legal instruments of AfCTA. As all eyes on the African continent on Wednesday are firmly fixed at the African Union (AU) Summit in Kigali where a crucial free-trade treaty is expected to be signed, rating agency Moody’s Investor Services said the African Continental Free Trade Area (AfCFTA) could improve the region’s credit profile although obstacles such as Africa’s under-developed infrastructure, non-tariff barriers and finance constraints could also limit its potential benefits. In its report titled “Sovereigns – Africa, Intra-regional trade can promote growth, but infrastructure and non-tariff barriers limit upside”, Moody’s managing director for credit strategy and the report’s co-author Colin Ellis said countries with larger manufacturing bases, such as South Africa, Kenya and Egypt, were more likely to benefit. “There is significant potential for further trade integration in Africa, which the AfCFTA could stimulate. This could improve the region’s credit profiles, given the greater stability and sophistication that intra-regional trade could offer compared with traditional commodity exports to the rest of the world,” Ellis said. “That said, countries with larger manufacturing bases and better infrastructure, such as South Africa and Kenya, are most likely to benefit from further integration. For others, poor infrastructure and non-tariff barriers will continue to restrict the trade sector’s development and long-term growth potential.” At least 53 African Heads of State have gathered in Kigali for the 10th Extraordinary Summit of the AU to consider...

This week marks the launch of the African Continental Free Trade Agreement (CFTA), which sets out to create a single market for goods and services, free movement of people, and expand intra-Africa trade.  In addition to promoting intra-Africa trade, the CFTA has the potential to promote regional value chains. In this post, we explore the lessons learned from highly integrated global trade and production networks. Challenge of integration Current interlinkages between African economies are insufficient to accelerate economic growth among regional economic communities including the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC), and Southern African Development Community (SADC). Extra-regional trade has historically outpaced intra-regional trade, often by 90 percent. Similarly, Africa lags behind much of the world in intra-regional integration. As seen in Table 1 below, the share of trade with countries within regional economic communities in Africa lies well below that of regional economic communities in Europe or Asia. Nevertheless, there exists variations in relation to trade integration across African countries. At the low end of the spectrum stands the Economic Community of Central African States (ECCAS), which only sourced 3.6 percent of imports from within. At the high end of the spectrum lies the Southern African Development Community, with 21 percent of exports and 22 percent of imports exchanged within the regional economic community. Putting regional value creation in a global perspective In recent years, countries have become increasingly integrated in global value chains (GVCs). Global production networks are made up of two...

African countries are set to put their signature to an agreement that will launch the African Continental Free Trade Area (AfCFTA) in Kigali, Rwanda, on Wednesday. The UN Economic Commission for Africa (UNECA) has estimated the agreement's implementation could increase intra-African trade by 52 percent by 2022, compared with trade levels in 2010. Here's what you need to know about the biggest trade agreement signed since the World Trade Organisation (WTO) was established. What is AfCFTA? African heads of government agreed to establish a continental free trade area in 2012 and started negotiations in 2015. The agreement is set to be signed by all 55 member states of the African Union, bringing together 1.2 billion people with a combined gross domestic product (GDP) of more than $2 trillion. The draft agreement commits countries to removing tariffs on 90 percent of goods, with 10 percent of "sensitive items" to be phased in later. The agreement will also liberalise services and aims to tackle so-called "non-tariff barriers" which hamper trade between African countries, such as long delays at the border. Eventually, free movement of people and even a single currency could become part of the free trade area. Why a single market for Africa? By creating a single continental market for goods and services, the member states of the African Union hope to boost trade between African countries. Intra-African trade is relatively limited; UNCTAD, the main UN body dealing with trade, said it made up only 10.2 percent of the continent's total...

Cross-border investments will play a big role in the East African Community (EAC) integration process, the finance minister has said. Speaking during the Commercial Bank of Africa (CBA) launch dinner on Monday, Amb Claver Gatete said the entry of the Kenya-based lender could help fast-track the integration of regional financial services. The minister said that local traders and Kenyans living in Rwanda will now find it easier to conduct cross-border money transfers or transact business, among other services, following the entry of the bank. Gatete added that Africa and Rwanda, in particular, needs strong financial institutions to boost economic growth, noting that there is already a comprehensive financial strategy in place to help achieve the objective. Minister Gatete added that CBA’s move to open shop in Rwanda was a “great step toward enhancing accesses to finance”. Commercial Bank of Africa Group Chairman Desterio Oyatsi and Uwase from BNR officially inaugurate CBA head office in Kigali The launch of CBA operations brings the number of commercial banks in the country to 16. The bank first entered the Rwandan market in January last year as a micro-finance institution, but it recently grew in stature after acquiring 100 per cent stake of Crane Bank Rwanda Limited from Uganda’s DFCU Bank. Speaking at the event, John Rwangombwa, the Governor, National Bank of Rwanda (BNR), urged the bank to create leakages with the informal banking sector, saying this would help deepen financial inclusion. Rwangombwa also called on banks to leverage technology and embrace innovation to...

Government and TradeMark Africa (TMA) have renewed partnership aimed at accelerating cross- border trade. The Ministry of Finance and Economic Planning and TradeMark Africa on Tuesday signed a financing agreement worth $53 million grant (about Rwf45 billion) to help support interventions that will result into job creation, poverty reduction and increase cross border trade. The agreement extends the current partnership until 2023, said Claver Gatete, the Minster for Finance and Economic Planning. This agreement marks the commencement of TMA’s second phase of interventions which will be implemented between 2018-2023, he said after signing the agreement in Kigali. According to the agreement, TMA has committed to work with government and private partners to support the construction of storage facilities around Rubavu and Rusizi ports of Lake Kivu and provide support to Rwanda’s plan to develop its industrial parks. According to minister Gatete, TMA has been a strong partner of government on a number of projects including construction of the Kagitumba One Stop Border Post, the development of the Rwanda electronic single window and the Rwanda electronic cargo tracking system and investment attraction towards the development of the Kigali logistics platform among other projects. “These have helped reduce the cost of doing trade significantly not only in Rwanda but across the region,” he added. Frank Matsaert, the TMA group chief executive officer, said the organisation will also expand its work in supporting the implementation of quality standards in key export sectors like honey, tea, coffee, meat and horticulture, automation of trade processes...

When the sun sets on Kigali today, March 21, 2018, it will signal a new dawn for Africa. A new chapter in our continent’s history that will be remembered by future generations as the onset of Africa’s economic liberation struggle. The imminent signing of the African Continental Free Trade Area was described by President Paul Kagame and many other speakers at the African Continental Free Trade Area (CFTA) Business Forum yesterday, as the best thing that has happened to Africa in the last five decades. In his closing line, however, President Kagame decried the slow pace at which we, Africans, are embracing the tremendous opportunities that are associated with Africa’s integration. He said that we seem to enjoy problems while solutions are also around. The purpose of this piece is to call on Africa, to embrace one such solution that will solve the “speed” problem – Digital. The internet (of people and things), big data analytics, artificial intelligence, Blockchain, autonomous cars, drones, robotics, 3D printing, biotechnology, quantum computing, etc have the potential of transforming governments and businesses at an exponential rate. Provided that we embrace the digital revolution instead of pushing back, the CFTA won’t be a dream to be realised by the next generation as it was often said. We can deliver it and enjoy its fruits while we are still with this generation of leaders that has taken up the challenge left by Africa’s forefathers who won the political liberation during the 60ies. As I sat in the...

South Africa's tax chief has been suspended, just days before ratings agency Moody's announces its decision of the rainbow nation's severeign credit status. Zimbabwe's president says Chinese mining firms owe Harare a lot. Uganda's president becomes the latest African leader to defect from the planned signing of a continental free trade deal. And the east African economy is doing very nicely, thank you. South African President Cyril Ramaphosa has suspended the country's top taxman with immediate effect. That's the top story in this morning's Johannesburg-based paper BusinessDay. It's also top of the front page of the Mail & Guardian and tabloid the Sowetan. According to the reports, Tom Moyane, the chairman of the South African Revenue Service, refused to step down after he was asked to resign by the president. According to the presidency, Ramaphosa explained his decision on the basis of a deterioration in public confidence in the South African Revenue Service and the compromising of public finances due to the ongoing controversy at the tax agency under Moyane's leadership. Ramaphosa said it was in the public interest to restore the credibility of the revenue service without delay. The Finance Ministry is to name an acting commissioner. Pressure has been building for Moyane to quit, says BusinessDay. Factors include a 48-billion-rand hole in revenue collection and Moyane's handling of conflict of interest allegations against senior members of his staff. The international ratings agency Moody's will make an announcement later this week on a possible downgrade of South Africa's sovereign...

I recently asked a business acquaintance how long it took to travel by road between DR Congo’s two biggest cities, Kinshasa to Lubumbashi. There was a long sigh, a pained look, then a helpless shrug. “It could take a week or two.” DRC is Sub Saharan Africa’s largest country but this seemed remarkable. A Google Maps search tells you the 1,451 miles (2,335 kilometers) between both cities should take 36 hours, but as my contact noted, it’s not quite that straightforward. A similar distance in the US, from New York to Oklahoma City, (2,373 km), would take take 22 hours, says Google. The DRC conversation came to mind while reading a report (pdf) from London School of Economics’ International Growth Centre, which argues that despite years of trade liberalization and tariff reductions across Africa, the impact has been significantly limited by the internal costs of moving goods within African countries and between neighbors. The high cost of moving goods from or to ports eats into the benefits of free or lower tariff trade. Research shows a one-day reduction in inland travel times could lead to a 7% increase in exports, the equivalent to a 1.5 percentage point reduction on importing country tariffs. Other research shows a 10% drop in transport costs could increase trade by 25%. As is likely in the case of DRC, 2015 research estimated the cost of transporting goods could be up to five times higher (per unit distance) in some sub-Saharan African countries when compared to...