On the eve on the signing of the Continental Free Trade Agreement two new trade support or lobbying organizations are vying for the attention of Head of States in Kigali.
- The Afrochampion Initiative – The website describes the organization as… a set of innovative public-private partnerships and flagship programs designed to galvanize African resources and institutions to support the emergence and success of African private sector multinational champions in the regional and global spheres.
The Initiative focuses on Advocacy on Private-Sector Driven African Integration, Policy Innovations to Drive intra-African Commerce, Corporate Best Practices that Champion Africa, Capacity Building in pan-African multinational management, Corporate Networking, Research, Benchmarking & Knowledge-sharing,
Founded by the advisory firm Konfidants, the organization is Co-Chaired by President Thabo Mbeki and Mr. Aliko Dangote, President and CEO of Dangote Group.
Afrochampion will be in Kigali sponsoring a full Business Day.
- Pan African Private Sector Trade Policy Committee (PAFTRAC) – Initially driven by African Export-Import Bank (Afreximbank), Ecobank Transnational Inc. (Ecobank), International Trade Centre (ITC) and with the blessing of the WTO was left dormant from 2011 until the eve of the CFTA signature. PAFTRAC has come in-force again under the leadership of Afreximbank to become the top voice of the private sector on the CFTA, eventually reporting directly to the Conference of African trade Ministers.
The organization has yet to call its first constituent assembly. Rendez-vous in Kigali is set for March 2018 at the Summit of Head of States to launch the Committee.
The African Export-Import Bank ( Afreximbank ) has signed a $100 million financing agreement with the Islamic Corporation for the Development of the Private sector ( ICD )in Shariah compliant countries. This is in line with the corporation plan to promote SMEs in Shariah-compliant countries. ICD is a multilateral organisation and a member of the Islamic Development Bank ( IDB ) Group.
The Chief Executive Officer of ICD, Mr Khaled Al Aboodi, in a statement yesterday, in Lagos, said that the facility being provided by ICD was for small and medium-sized enterprises ( SMEs ) in ICD-member countries. Aboodi noted that the facility is for SMEs in the industrial, communication, technology, healthcare, construction and agricultural sectors.
On his part, the Executive Vice President at Afreximbank, Mr. Amr Kamel, stated: "This facility will give a boost to our effort to implement our current strategy which prioritises intra-African trade, intra-African investments and export manufacturing of the labour intensive type. "It will also promote our knowledge in Islamic finance and provide us with additional manoeuvring capacity in terms of product offerings to our clients. "We are delighted that ICD has chosen to partner with us in the pursuit of Africa's trade development.
"This collaboration will contribute to the objective of fostering sustainable economic growth in the member countries of our two institutions leading to job creation, contribution to export and Islamic finance development, among others."
The mandate of ICD is to support economic development and promote the development of the private sector in member countries through providing financing facilities and/or investments which are in accordance with the principles of Shari'ah.
ICD also provides advice to governments and private organisations to encourage the establishment, expansion and modernisation of private enterprises. Afreximbank, on the other hand, is the foremost pan-African multilateral financial institution devoted to financing and promoting intra- and extra-African trade.
The bank which has its headquarters in Cairo, Egypt, was established in October 1993 by African governments, African private and institutional investors and non-African investors. (All Africa)
Tanzania’s energy regulator raised the maximum price for petrol, diesel and kerosene on Wednesday, citing rising international crude oil prices.
Fuel prices have a big influence on the inflation rate in the East African country. In the 12 months through November inflation eased to 4.4 percent, from 5.1 percent the previous month, but the fuel price hikes could push the inflation rate up again, analysts said.
Tanzania’s Energy and Water Utilities Regulatory Authority (EWURA) raised the maximum retail price of petrol by 0.35 percent and increased the cap for diesel by 1.71 percent.
The maximum kerosene price was lifted 4.57 percent in the latest monthly price decisions, which take immediate effect.
“The changes in local prices of petroleum products are mainly due to changes in world oil market prices and bulk procurement system (BPS) premiums,” EWURA said in a statement.
The regulator increased the price of petrol in the commercial capital Dar es Salaam by 8 shillings per litre to 2,167 shillings ($0.9709), and the price of diesel in the capital by 34 shillings to 2,018 per litre.
Kerosene prices in the city rose 89 shillings to 2,031 shillings per litre – 1 USD = 2,232.00 Tanzanian shillings. (CNBC Africa)
Overcoming the barriers for intra-African trade to double in a decade can feel like a Sisyphean task – impossible to complete. But that is the objective of the Boosting Intra-African Trade (BIAT) action plan, which targets to double flows between January 2012 and January 2022.
Many individual African nations will not, on their own, have significant production or purchasing power any time soon. To accommodate such young populations and produce or enable meaningful employment, GDP growth has to sky-rocket, not hobble along. That requires clubbing together.
Yet global and regional trade agreements are grappling with shifting geo-politics or are being tripped up by populism. Or both. So, on a continent not known for its speedy cohesiveness, will leaders have the pragmatism to give up lofty individual ambitions that may be more realisable at a regional level?
Traditionally, governments have sought the hegemony given by a national airline, stock exchange, broadcasting corporation and grid. But when, in November 2017, an east African chief justice broached the idea of a regional court to handle electoral disputes, it sounded sensible and not just because it would mitigate the risk of bias. It would also enable the building of expertise.
Of course, there is no shortage of plans and accords in Africa. Most political leaders can put together a team of policy wonks, legal eagles, technology experts, financial pundits. Eventually a reasonable agreement is likely to be born, preferably capturing the many disparate, uneven needs and desires across the continent, after behind-the-scenes retreats and maybe even Skype calls.
Once agreed, implementation creates a whole new world of opportunities. It also opens a Pandora’s box of Machiavellian tricks that can appear as suddenly as police officers on our roads.
This requires leadership at another level. Leadership that is about anticipating, preventing and removing blockers to make way for a common good. Leadership that is equally about promoting the upside and advocating compliance (in actions, not just words), as well as celebrating success just long and judiciously enough to make it feel worthwhile. There is still too much to be done.
The BIAT action plan focuses on seven interlinked areas. The objectives, at times, reiterate the obvious, such as harmonising and simplifying customs and transit procedures and documentation.
One of the worst legacies of colonialism is a disproportionate passion for forms, stamps and (in some cases) queues. All reinforcements of an outdated authority. Even introducing technology has not always been radical enough. We need to go back to basics. Allow the trader to transport that food product or spare part container to its destination quickly, safely and legitimately.
The plan’s success rate will be improved if it uses African and global lessons learnt where appropriate.
Coupled with BIAT – as closely as possible if we are to avoid duplications and contradictions – is the Continental Free-Trade Agreement (CFTA), due finally to be adopted in March 2018. How it will overcome the hurdles that the current regional economic communities have not remains to be seen.
The president of Niger and the executive secretary for the United Nations Economic Commission for Africa consider intra-African trade to be “different from the trade goods that flow from Africa to the rest of the world, which are mostly crops, mineral products, metals and oil” — presumably because all of these are susceptible to globally-determined prices and bought by companies that want to create their own end products in factories that have reliable, cost-effective power, trained labour, good transport links, scale and so on.
Instead, President Mahamadou Issoufou and Vera Songwe believe that the CFTA will allow local small and medium-sized enterprises, the continent’s overwhelming employer, to manufacture and sell “value-added and industrial products like processed agricultural goods, basic produce, and financial and retail services” to neighbours, both next-door and a few thousand kilometres away. This could force infrastructure and education to improve. It could even substitute imports.
It is incumbent upon BIAT and CFTA to enable and require Africans to:
- Produce physical and digital products and services that Africans need or want
Here’s a list to start with:
- Dairy, especially in West Africa. I know Hausa-Fulani cows can produce yoghurt, as I saw it on sale in Ibadan, Nigeria. I went back to buy it the following day, having been assured I would find the shop open. It was firmly closed. (Will the trade agreement encourage better service?)
- Suitable textiles and clothes for the different climates across the continent.
- Solar PV panels. Renewable energy is a significant new employer in countries like the United States of America, Germany, India, China and Brazil.
- Integrated inter-city and urban transport using renewable energy (carriages and stations) and offering modern payment options and amenities such as Wi-Fi.
- Affordable financial services (not only plain vanilla collateralised loans) for small and medium-sized enterprises. Fintech platforms such as loans4SME.com, Lendingkart Finance and incomlend.com already exist and, where appropriate, could be adapted for Africa.
- Patent lawyers. Generally, I am concerned Africa is producing too many lawyers, given the advancements in artificial intelligence, but this is a specialisation the continent needs.
- Make it easier to pay for them
Ever tried buying cotton from Burkina Faso when you’re in Nigeria? Flutterwave is a Nigerian/US payments solution that can be used across the continent. Binkabi is allowing cross-border trade to take place without using the US dollar.
- Resolve disputes quickly and online
To encourage cross-border (including high volume, low value, business-to-consumer) trade, buyers and sellers must have confidence that any issues will be resolved in a timely and efficient manner.
Consumer ombudsmen have signed up twenty large, voluntary retailers (including supermarkets) in some European Union countries on a single platform. Once a customer inputs a case onto this platform, the retailer has to respond, otherwise it gets heavily penalized. This gives a controlled environment, with a centralized authority.
In Africa, we require functioning ombudsmen in the major economies where there are common retailers. How will the CFTA/BIAT address this?
- Protect personal data
Governments in Africa must start taking data protection and encryption far more seriously. Only then can they get the private sector to do so. And not just for financial transactions – data can be worth more than the money.
- Protect intellectual property
The capacity for evaluating and protecting intellectual property varies vastly across the continent. It needs to be in place in order to improve the quality, relevance and timeliness of research and development on the ground.
- Have affordable, reliable Internet access
“The ability for businesses and consumers to use the Internet requires an enabling environment – a set of laws and institutions that support the process of buying, paying, and delivering digital [and physical] products”, hence the points above. Robust Internet and communications technology is the infrastructure to enable e-commerce, which will in turn bolster cross-border trade.
- Selectively use blockchain
Nuts don’t require sledgehammers.
It is, understandably, tempting to use technology that can combat corruption, even at a price. However, scalability, latency, lack of mainstream understanding, resistance (deliberate or otherwise) by some sectors to rely exclusively on data in digital form, outdated legacy systems (which may not always be the case in Africa), lack of national/cross-border regulation (which may appear counter-intuitive, but is it being discussed by CFTA/BIAT?), standardisation, interoperability, accountability, legality of smart contracts, privacy/security, and competition/anti-trust are all open challenges. Private distributed ledgers could help, but the cost-effectiveness still needs to be evaluated.
- Cede national pride for the benefit of the continent
CFTA has to be phased in if it is to work. Competition will, like IP and e-commerce, only “be part of the second phase of CFTA negotiations – expected to be launched after the conclusion of negotiations on goods and services”. However, it is one of the causes for any regional trade agreement to unravel. Still, African governments that are ready to stop hanging onto old, territorial ways of doing business and share the cake (or kola nut or other equivalent) may be pleasantly surprised at the results. (The Citizen)
Zimbabwe has invited bids for stakes in up to eight loss-making state-owned enterprises, including its national airline and power utility, to help plug a ballooning budget deficit, its deputy finance minister said on Wednesday.
President Emmerson Mnangagwa, who took over from Robert Mugabe two months ago, is under pressure to deliver on his promises to ease spending pressures on the budget and revitalise the economy, which collapsed especially after violent and chaotic seizures of white-owned commercial farms in early 2000s.
Zimbabwe’s budget deficit hit $1.82 billion or 11.2 percent of GDP in 2017 from an initial target of $400 million, while its economy hardly grew in 2016.
Over the last four years, Zimbabwe has failed to cut its deficit despite promises to do so, mainly due to high government spending on public sector salaries, which accounted for more than 90 percent of the 2016 budget.
“We are diluting our shareholding in those entities and our shareholding might go to zero percent in some entities,” Terence Mukupe told Reuters.
Zimbabwe either partly or wholly owns 92 companies, most of which have been making losses for years due to mismanagement, high operating costs and old equipment. In 2016, 38 such parastatals ran losses totalling $270 million, according to a report from the president and cabinet office last October.
National airline Air Zimbabwe, which runs four aircraft, is sitting on a more than $300 million debt pile while railway operator National Railways of Zimbabwe recently received a $400 million recapitulation from South Africa’s Transnet.
Power utility Zesa Holdings has struggled since 2000 to generate enough electricity to meet demand and power outages have hurt businesses in recent years, according to the Confederation of Zimbabwe Industries (CZI).
In 2016, Zesa suffered a $224 million loss due to higher electricity import costs and because it is selling power at below cost.
Zimbabwe is also selling off its shareholdings in several other companies, including bankers, ZB Holdings and Agribank as well as insurer, Zimre Holdings, which has operations in several regional countries. (Reuters)
The Communications Authority of Kenya (CA) has released a revised competition report that proposes the country’s leading telecommunications company separates into business units.
The report has been subject to criticism, especially from Safaricom’s rival and Kenya’s second largest telecom, Airtel.
Airtel has argued that the report could be damaging for smaller operators due to its failure to finalise the dominance debate.
“We strongly think that the CA urgently needs to reassure all stakeholders of its independence and commitment to ensuring a properly regulated telecoms industry,” stated Airtel.
The CA has responded, stating that the report was revised following wider consultations and input contributed by all industry stakeholders.
The report’s first draft was disclosed to the media in February 2017, releasing the suggestion that Safaricom split its voice and mobile money units, becoming competitors of rival firms.
This would have also led to the telecommunications company sharing its infrastructure with its competitors.
“The proposed remedies are rather weak and not comprehensive,” Airtel added.
“We can’t quantify the direct impact [of the delays] on Telkom,” said Telkom Kenya, Kenya’s third largest telecommunications firm.
“However, from a general perspective, the failure to deal with the issue of dominance in this industry is tantamount to having no regulation of competition in our market.” (African Business Chief)
OVERVIEW : Paper _ Implications of External Trade and Investments Agreements on CFTA
The purpose of this paper is to provide an overview of the interaction between Africa’s main external trade arrangements(EPA, AGOA) and the CFTA.
Section A provides an overview of EU trade agreements with Africa and their implications for Africa. Exportoriented industries are likely to benefit or at least stay competitive in the EU market, but various local industriescould be negativelyaffected as a result of the implementationof the EPA.
Subsequently, Section B provides an overview of US trade arrangements with Africa and discusses US trade and investmentpolicy with Africa.
SectionC discussesinteractionsbetween EU and US trade arrangementsand the CFTA.
SectionD concludes with some recommendations.
OVERVIEW : Paper _ Private Sector in CFTA negotiations and Implementation
Section A of this paper describes the state of play of Continental FTA (CFTA) negotiations and possible contours of a deal by the next AU Summit in January 2018. It shows that negotiators have done a lot of work but Phase 1 of the CFTA which focuses on trade in goods has not been fully completed. Thus, the CFTA negotiations remains an on-going process which provides a lot of room for business advocacy .Furthermore, the negotiation mandate for Phase 2 of the CFTA negotiations, which might contain issues of investment policy,e-commerce competitionpolicy,services liberalisationand regulation,has not yet been agreed.
Section B discusses the possible role of the private sector in the CFTA negotiations and implementation. In 2012, Heads of State agreed to the need to immediately establish regular formal platforms for organized private sector for trade policy dialogue, including at the level of African Union. In policy papers leading up to the CFTA negotiations, the African Union Commission had proposed an African Business Council as part of the institutional structure of the CFTA. However none of these decisions or proposals have been implemented and the current draft CFTA text does not contain references to organized private sector nor does not seem to recognize business as a vital partner/stakeholder in the CFTA. Yet, models from other regions suggest that business should be given a formal place in the institutional structure of the AU or CFTA, while at the same time leaving it to business to self-organize themselves. Examples discussed include the ASEAN Business Advisory Council (BAC), MERCOSUR Economic-Social Consultative Forum, Andean Business Advisory Council and the Business 20 (B20).
Finally, Section C provides some recommendations for increasing private sector participation in the negotiationand implementationof the CFTA.
“THERE is life after Buenos Aires,” soothed Susana Malcorra, chair of the 11th ministerial meeting of the World Trade Organisation (WTO). Multilateralism may not be dead, but it has taken a kicking. Expectations were low as the meeting began in the Argentine capital. They sank even lower as it progressed. Delegates failed to agree on a joint statement, let alone on any new trade deals.
Many arrived with a culprit already in mind. Robert Lighthizer, the United States Trade Representative, was the face of an administration that is both questioning the benefits of multilateralism and jamming the WTO’s process of settling disputes. As negotiations progressed, some delegates groused that American leadership was lacking. Some even speculated that the Americans might be happy if multilateral talks foundered. What better proof, after all, that the system is broken?
Ms Malcorra, without mentioning the Americans by name, warned against creating scapegoats out of those who might recently have “shifted gear”. The WTO, after all, had problems before Mr Lighthizer took up his job. Decisions are made by consensus, which leaves deals vulnerable to hostage-takers. In some cases, the victim is the negotiating agenda. Still hanging over the WTO is a 16-year-old negotiating round, in theory meant to further global development. Until that round is concluded, members such as South Africa are reluctant to negotiate on any new issues, like rules on e-commerce or investment facilitation.
Members arrived in Buenos Aires in disagreement, and refused to budge. The Indian delegation wanted to lift restrictions on its government’s ability to distribute stockpiles of food. When the Americans refused, the Indians looked for a way to retaliate. They ended up killing an agreement to ban subsidies for illegal, unreported and unregulated fishing—as national leaders had agreed to do by 2020 as part of the United Nations’ Sustainable Development Goals. Cecilia Malmstrom, the European trade commissioner, called this failure “horrendous”.
Amid the triumph of self-interest over the greater good, there were some grounds for cheer. For now, it seems Mr Lighthizer is planning to influence the multilateral system from within. A joint statement released by America, Japan and the European Union pledged “to enhance trilateral co-operation in the WTO” when dealing with excess capacity, forced technology transfer and local-content requirements.
Perhaps more importantly, members are actually moving ahead on some issues. A coalition of countries ranging from America and the EU to Cambodia has signed up to negotiate new rules on e-commerce on a plurilateral, rather than a multilateral, basis. As long as enough members agree among themselves for the deal to be worthwhile, and do not discriminate against other members of the WTO, a deal is possible. The message was clear: if some members want to block discussion, then they will be left behind.
It seems unlikely that a surge of plurilateral agreements will be enough to jolt the WTO into life. For that, the organisation’s members will need to show more commitment to it—and to learn the art of compromise. Roberto Azevêdo, the WTO’s director-general, wrapped up the conference by reminding members that “multilateralism doesn’t mean that we get what we want. It means we get what is possible.” (The Economist)