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Will intra-Africa trade come of age in 2018?

09 January 2018
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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:

  1. 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.
  1. 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.

  1. 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?

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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)

  • Sierra Leone signs The Afican Continental Free Trade Agreement

    Sierra Leone signs The Afican Continental Free Trade Agreement

    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.

    Free movement

    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.

    New government

    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.

    ( article By KEMO CHAM Nation Media Group )
  • AfCFTA  WORKSHOP SERIES- Nairobi Edition October 23rd - 24th, 2018

    AfCFTA WORKSHOP SERIES- Nairobi Edition October 23rd - 24th, 2018

    AfCFTA WORKSHOPS SERIES 2018

    First Edition - The Weston Hotel, Nairobi - Kenya!

    October 23 - 24, 2018, 

     

    The Workshop is Happening Now!

     

     

     

    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.

     

    WORKSHOP  PROGRAM

    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 Workshop is Happening Now!

     

     

     

     

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The Pan African Chamber of Commerce and Industry was established in 2009 by 35 founding national business chambers to influence government policy and create a better operating environment for business.

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