African leaders gathered in Kigali have signed the Continental Free Trade Area (CFTA) treaty to create the world’s largest single market. The agreement, signed by more than 40 African nations, is said to be the largest since the creation of the World Trade Organisation. The pact aims at boosting intra-Africa trade by making Africa a single market of 1.2 billion people with a cumulative gross domestic product of more than $3.4 trillion. “For Africa, after decades of independence, marked by persistent under-development and a marginal place in the international system, the terms of the debate are laid down in almost Manichean terms: Unite or Perish, as Kwame Nkrumah said at the Addis Ababa founding Summit,” African Union Commission chairman Moussa Faki Mahamat told heads of states and governments at the signing ceremony. “Our peoples, our business community and our youth, in particular, cannot wait any longer to see the lifting of the barriers that divide our continent, hinder its economic take-off and perpetuate misery, even though Africa is abundantly endowed with wealth,” Mr Mahamat said. Of the 55 African Union member states, 44 countries signed the pact establishing the CTFA and 43 nations the Kigali Declaration launching the free trade area. Notable of among those that failed to sign the deal is the continent’s largest economy, Nigeria, with President Muhammadu Buhari having skipped the AU summit amid reservations on the treaty. Some 27 countries also signed the Protocol on Free Movement of Persons and the African Passport. The protocol allows...

President Uhuru Kenyatta was in Kigali yesterday to join other African leaders in sigining a new trade agreement. The African Continental Free Trade Area, which has been in the works for six years, will bring together 55 countries with a combined population of 1.2 billion and GDP of about Sh344.08 trillion. The trade pact, which includes Protocol on Trade in Goods, Protocol on Trade in Services and Protocol on Dispute Settlement, is expected to reduce tariff and non-tariff barriers which hamper intra-African trade. Nigeria and Uganda did not sign the agreement and sought more time. Signatory states will commit to absolving tariffs on 90 per cent of goods with 10 per cent of “sensitive items” to be phased out after further deliberations. It will also address licensing rules and quotas presented in non-tariff barriers. “Kenya has already removed tariffs on 37 per cent of total tariffs under the EAC Common External Tariff so Kenya will effectively remove tariffs on about 53 per cent of total tariffs,” Trade PS Chris Kiptoo told the Star. “The AfCFTA also provides for mechanisms on addressing non tariff barriers which has been a major hindrance to intra-African Trade.” AfCFTA, which will come into force after it has been signed by either 15 or 22 states - a number that has yet to be agreed on - will need to be ratified by the individual countries through respective domestic processes. This will lead to a second phase of negotiations which will be held later to cover...

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...

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...