The AfCFTA will provide a number of opportunities for the Indian firms and investors to tap into a larger, unified, simplified and more robust African market. It is critical for India to view Africa not just as a destination for short-term returns but as a partner for medium and long-term economic growth. An important component affecting the volumes of trade with Africa is the “third-country fabric” provision. Various Asian countries’ traders and investors, including those from India, are reaching out to the African markets as a market of “choice”. This is often perceived as a way to indirectly take advantage of the preferential trade programmes offered to the African countries by the third parties. A case in point is the African growth and Opportunities Act of the US, under which some African countries are eligible to source raw materials from third countries like India and China, to make clothes and then export to US duty-free. Such provisions help to shield African industries such as textiles and apparel, which have benefitted from huge amounts of Indian and Chinese investments in African export processing zones. Therefore, to establish a long-term partnership with Africa, India should not target African markets only for its unilateral preferences granted by the third parties.
To mitigate the expected trade losses for the African countries resulting from the establishment of MRTAs, especially the RCEP, India and Africa must build a solid partnership to boost their bilateral trade and investment flows. To this end, India’s active support towards Africa’s ongoing continental integration efforts can serve as basis for negotiations aimed at reciprocal market access and investment opportunities. It is important to note that positive outcomes for the India-Africa trade and investment partnership are hinged on Africa having sufficiently integrated markets, enhanced regional and continental connectivity, and improved infrastructure facilities. These will, in turn, help the African countries to address the supply-side constraints, remove bottlenecks, and move up the regional value chains. The African Trade Policy Centre of the ECA and CII must continue to work closely to identify the sectors that offer opportunities for development in Africa in the context of AfCFTA reform. [The author: Abhishek Mishra; Related ATPC, CII study: Deepening Africa-India trade and investment partnership]
Ethiopia’s investment body has announced a decision to admit foreign investment into the country’s logistics sector, local media portals have reported.
The move by the Ethiopian Investment Board means the sector is no longer reserved for nationals. Foreigners are also able to own 49% or less in joint venture arrangements.
A document clarifying the news and widely cited by the media read in part that the areas being looked at include: the provision of bonded warehouse, consolidation and de-consolidation services, and allow joint venture participation of international logistics service providers holding up to 49% or less stakes.”
Article 3.1(b) of Ethiopia’s investment regulation previously said: “packaging, forwarding and shipping agency services” are “exclusively reserved for Ethiopian nationals.”
The development forms part of the government’s economic reform efforts. Prime Minister Abiy Ahmed since taking office in April 2018 has undertaken a series of reforms with a key plank being the opening of Ethiopia’s economy to a certain amount of private investment.
Much has been written on the escalation of the trade dispute. What hasn’t been discussed is what will be the impact on developing nations who rely on trade as an engine of economic growth for ending poverty. As tariffs are beginning to be imposed, my team analyzed the impact of these new tariffs and the potential for tariff escalation in developing countries in a new World Bank working document. We found that the new trade tariffs will depress bilateral trade, disrupt global supply chains, and increase demand for substitutes from developing countries.
In the current uncertain global business environment, all countries need to act to retain investor confidence and avoid the disruption of trade flows and global supply chains. Countries can improve the credibility of future policies by deepening their commitments in multilateral fora such as the WTO and regional trade agreements. The timely and clear communication of all future changes in trade policy are important to minimize policy uncertainty.
Despite recent softening, global economic growth will remain robust at 3.1 percent in 2018 before slowing gradually over the next two years, as advanced-economy growth decelerates and the recovery in major commodity-exporting emerging market and developing economies levels off, the World Bank said.
“If it can be sustained, the robust economic growth that we have seen this year could help lift millions out of poverty, particularly in the fast-growing economies of South Asia,” World Bank Group President Jim Yong Kim said. “But growth alone won’t be enough to address pockets of extreme poverty in other parts of the world. Policymakers need to focus on ways to support growth over the longer run—by boosting productivity and labor force participation—in order to accelerate progress toward ending poverty and boosting shared prosperity.”
Sub-Saharan Africa: Growth in the region is projected to strengthen to 3.1 percent in 2018 and to 3.5 percent in 2019, below its long-term average. Nigeria is anticipated to grow by 2.1 percent this year, as non-oil sector growth remains subdued due to low investment, and at a 2.2 percent pace next year. Angola is expected to grow by 1.7 percent in 2018 and 2.2 percent in 2019, reflecting an increased availability of foreign exchange due to higher oil prices, rising natural gas production, and improved business sentiment. South Africa is forecast to expand 1.4 percent in 2018 and 1.8 percent in 2019 as a pickup in business and consumer confidence supports stronger growth in investment and consumption expenditures. Rising mining output and stable metals prices are anticipated to boost activity in metals exporters. Growth in non-resource-intensive countries is expected to remain robust, supported by improving agricultural conditions and infrastructure investment.
Completely opening up the EU market to African goods would help reduce migration, German Development Minister Gerd Müller has said. In particular, he wants barriers to agricultural trade taken down.
The European Union should completely open its market to products from Africa in order to promote development and stem migration flows, German Development Minister Gerd Müller said Wednesday.
"Open the market for all African goods," he told Die Welt newspaper in an interview.
Agricultural products from Africa must be able to enter the EU without tariffs and quotas in order to provide work for millions of people on the continent, Müller said.
The EU currently has separate trade agreements with African countries or regional economic blocs. In addition to tariffs and quotas, agricultural products face a hurdle being exported due to the EU's strict sanitary and phytosanitary standards.
Müller also suggested that as part of an agreement with the EU, African countries should take back migrants who entered the bloc without proper approval. In return, the EU should open up avenues for Africans to come to the EU for legal employment.
Only around 1,000 out of 3.5 million German companies are active in Africa, Müller said, highlighting the massive potential in the continent of 1.2 billion people. On the other hand, China, Russia and Turkey have aggressively entered the Africa market.
Support from coalition, farmers
Müller, a member of the Christian Social Union (CSU), the Bavarian sister party of Chancellor Angela Merkel's Christian Democratic Union (CDU), received support for his ideas from the Social Democrats (SPD).
SPD agriculture spokesperson Bernd Westphal told the daily Berliner Zeitung on Thursday that opening the EU's agriculture markets would improve employment prospects in Africa and reduce migration pressures.
The German Farmers Association also supported the idea of duty- and quota-free African agriculture exports to the EU. At the same time, the association's general secretary, Bernhard Krüsken, said processed and value-added agriculture products should be encouraged because they provide more employment and wealth creation.
EU Africa Commissioner
Müller also called for a new EU Africa commissioner position to be created to coordinate and expand policy towards the continent. In addition, at the EU level more money should be spent implementing the bloc's Africa policy, he said.
cw/sms (AFP, dpa)
Sierra Leone has become the latest country to subscribe to the trade treaty seeking a unified African market. President Julius Maada Bio appended his signature to the African Continental Free Trade Area (AfCFTA) agreement in the Mauritanian capital, Nouakchott on Monday, State House in Freetown disclosed. President Bio, in office for just four months, was making his maiden appearance at the 31st Ordinary Session of the African Union General Assembly.
The theme was: ‘Winning the Fight Against Corruption: A Sustainable Path to Africa’s Transformation.’
President Bio is the head of the AU’s Committee of Ten on the Reform of the United Nations Security Council, a position he inherited from his predecessor Ernest Bai Koroma.
He is also chairman of the AU Peace and Security Council, under which he chaired several sideline meetings. AfCFTA promises to break the cross-border trade barriers to ensure productive economic activities among member countries. It specifically aims to create a single continental market for goods and services, with free movement of business people and investments, and thus paving the way for accelerating the establishment of a continental customs union.
The deal initially requires members to remove tariffs from 90 per cent of goods to allow free access to commodities and services across the continent. AfCFTA's overall goal is to bring together the 54 African countries with a combined population of more than one billion people and a gross domestic product of more than $3.4 trillion, the AU says.
If successfully implemented, analysts say, it could increase the economic diversification and intracontinental trade significantly. And a study attributed to the UN Economic Commission for Africa (UNECA) notably says that AfCFTA could lead to a 52 per cent increase above the baseline in intra-African trade flows by 2022.
The agreement, which was first unveiled at an extraordinary summit of the AU Heads of State and Government in the Rwandan capital, Kigali, earlier in March, will create what has been described as potentially the largest free-trade area in terms of participating countries since the formation of the World Trade Organisation.
Sierra Leone was in the middle of its elections at the time which ushered in a new government.
Freetown State House said Monday in a statement that President Bio’s ascension to the agreement signifies his commitment to his “ambitious agenda” to ensure that it has access to the rest of the continent’s market and use trade and investment to revitalise its economy.
The agreement had been signed by 44 member countries in Kigali.
Kenya, Ghana and Rwanda were first to sign and ratify the agreement.
It requires 22 ratifications by members for the treaty to come into effect.
AfCFTA WORKSHOPS SERIES 2018
First Edition - The Weston Hotel, Nairobi - Kenya!
October 23 - 24, 2018,
For exporters, importers and cross-border investors to learn how the African Continental Free Trade Agreement (AfCFTA) and other trade changes will impact your business this year and beyond.
We’re speaking with leaders who are on top of all the changes and innovations made to the most important trade agreement in Africa. We’ll be offering up a mix of information on tax reform, AfCFTA, trade/tariffs and more.
This special AfCFTA workshop series, in collaboration with the experts at AU Commission, will be held in various cities over the coming months, with the kick-off in Nairobi October 23 - 24, 2018. For each discussion, members may tune-in from anywhere.
1. Keynotes on the AfCFTA and its implementation
2. The business framework and the outlook for AfCFTA and its implications on African countries [Presentation]
3. Challenges and opportunities: a practical approach [Panel Discussion]
4. The deepening of East African integration, and Kenya as key player in regional supply chains [Presentation]
5. The most prominent concerns of the AfCFTA implementation, immigration and border security [Presentation]
6. Importance of the AfCFTA to Ethiopia, Ghana, DRC, Mozambique, Morocco [Panel Discussion]
7. AfCFTA and Getting Globalization Right: Poverty, Inequality, and Trade [Presentation]
8. Rules of origin, arbitration, and the effect of exchange rates on the utilization of AfCFTA; [Presentation]
9. Market Panel: Tanzania, Congo, Togo, Uganda [Panel Discussion]
10. INDUSTRY TOUR
Join PACCI for this important event in-person or virtually.
Goal: Learn from practitioners and experts who are up-to-date on all the information exporters and importers need to know about AfCFTA.
Who Should Attend: Executives at exporters, importers and investors – CEOs, COOs, CFOs, EVPs, business, sales, marketing.
– – – – – – –
In-person location: African Union Headquarter - Addis Ababa
ABOUT THE AfCFTA
AfCFTA is a new trade agreement between African countries.
It makes it easier to export goods and services, benefitting people and businesses in Africa.
On 21 March 2018 African heads of state and government officials met in Kigali, Rwanda, to sign the framework to establish this initiative of the African Union.
National parliaments in African countries will then need to approve AfCFTA before it can take full effect.
It will only enter into force fully and definitively, however, when (twenty-two) 22 AU Member
States have ratified the Agreement.
The deal will bring benefits for people and businesses across Africa. It will help to generate growth and jobs by:
- Boosting exports;
- Lowering the cost of the inputs businesses need to make their products;
- Offering greater choice for consumers, and
- Upholding African standards for products.
WHAT WILL AfCFTA DO?
AfCFTA offers new opportunities for African businesses of all sizes to export across the continent. Following ratification AfCFTA removes duties on 90% of products (tariff lines) that the African countries trade with other African countries.
The agreement will especially benefit smaller companies who can least afford the cost of the red tape involved in exporting to other African countries. Small businesses will save time and money, for example, by avoiding duplicative product testing requirements, lengthy customs procedures and costly legal fees. Member States' authorities dealing with export promotion and chambers of commerce stand ready to help businesses to start exporting in Africa, boost existing trade, and attract investment.
The agreement also offers better legal certainty in the service economy, greater mobility for company employees, and a framework to enable the mutual recognition of professional qualifications, from architects to crane operators.
PROCEDURE AND NEXT STEPS
AfCFTA will be fully implemented once 22 Member States ratify the deal according to their respective constitutional requirements. At the time AfCFTA will take full effect, a new Dispute Resolution System will be put in place.
THE BENEFITS OF AfCFTA
- Helping to generate growth and jobs
- Creating a level playing field for African companies, big and small
- Lowering prices and widening choice for Africa's consumers
- Cutting customs duties for exporters and importers
- Cutting other costs for African businesses
- Making it easier for African firms to sell services across Africa
- Helping Africa’s rural communities market distinctive food and drinks
- Protecting Africa's innovators and artists
- Recognizing each other's professional qualifications
- Protecting people's rights at work, and the environment.
The Intra-African Trade Fair 2020
to be hosted by Rwanda
Trade Fair -2018 closed with turnover of USD 30 billion
Cairo - The turnover between companies participating in the first edition of the Intra-African Trade Fair (IATF / 2018), closed on Monday dec 17, 2018 in Cairo, Egypt, valued at about 30 billion dollars, thus it exceeded the expectations of the African Union (AU), promoter of the event.
The Rationale for the Trade Fair
Analysis by the African Export- Import Bank (Afreximbank) shows that one of the main reasons why intra-African trade is low at around 15% compared to Europe (59%), Asia (51%), and North America (37%) is because of lack of access to trade and market information. To address this challenge, Afreximbank decided to, among other initiatives, convene the Intra-African Trade Fair every two years to provide trade and market information and connect buyers and sellers from across the continent.
What IATF 2018 offered?
The Intra-African Trade Fair is the first of its kind in Africa, consisting of a 7-day trade show that provides a platform for sharing trade, investment and market information and enabling buyers and sellers, investors and countries to meet, discuss and conclude business deals. It provides an opportunity for exhibitors to showcase their goods and services, engage in Business to Business (B2B) exchanges and conclude business deals.
IATF provides a platform for entry into a single market of over one billion people joined together under the African Continental Free Trade Area.
Primary Objectives of the Intra-African Trade Fair
- To bring together continental and global players to showcase and exhibit their goods and services, and to explore business and investment opportunities in Africa
- To serve as a marketplace where buyers and sellers of goods and services meet and explore business opportunities
- To provide a platform for B2B exchanges and development of business opportunities
- To share trade, investment and market information with stakeholders including investors, SMEs, the informal sector, Africans in Diaspora, and to identify solutions to address the challenges affecting intra-African trade
- For Afreximbank and other financial institutions, to share information about their trade finance and trade facilitation interventions that will support intra-African trade
- To discuss topical issues affecting intra-African trade and provide practical and effective solutions
- To deploy multi-country and multi-company pavilions that will serve as one-stop shop for intra-African trade and investment opportunities in Africa
What is Intra-African Trade?
Afreximbank defines intra-African Trade as the trade in goods and services between or among African countries and the flow of goods and services between Africa and Africans in the Diaspora. The scope of intra-African Trade has also been broadened to include informal cross border trade to enable the Bank to design special products and dedicate resources to formalize this trade.
Afreximbank Strategy to promote Intra-African Trade
The Trade Fair is informed by Afreximbank’s strategy for the promotion of Intra-African Trade. The strategy can be summarized under three key pillars: Create, Connect and Deliver
Create: This pillar supports the production of goods and services with a view to enhancing engagement in regional trade. It seeks to build capacity for the expansion of production and processing capabilities, with a focus on agricultural production, agro-processing, manufacturing and services.
Connect: Afrexim seeks to provide traders with links to various markets on the continent. The Bank aims to identify institutions and agents that are able to facilitate the connection of demand and supply across markets. This pillar is central to the trade fair, which is aimed at bringing relevant entities together and facilitating business growth and opportunities.
Deliver: Here the focus is on facilitating the provision of efficient and cost-effective distribution channels within the continent. This includes the creation of transport logistics, storage and service payment systems, and buyer-financing arrangements which will help to accelerate the flow of goods and services to buyers, thereby creating a market.
The Trade Fair will contribute towards the bank’s objective to increase intra-African trade from USD170 billion in 2014 to USD 250 billion and by so doing, ensure that intra-African trade share of Africa’s total trade reaches 22% by 2021. “Conservatively, intra-Africa trade is a USD 6 trillion opportunity for Africa in the short term and USD 12 trillion in the long term” (Amy Jadesimi: Forbes, May 23 2017). Afreximbank will use the Trade Fair as well as other interventions to assist the continent to realise its trade potential and achieve positive transformation for Africa.