The Continental Free Trade Area (CFTA) between African countries is a topic for debate among entrepreneurs and politicians alike. To encourage the debate, CFTA.Now invited Mr. Kebour Ghenna the Executive Director of the Pan African Chamber of Commerce and Industry (PACCI) to answer some questions that will help us better understand that subject matter.
Africa is on the eve of signing the Continental Free Trade Agreement, how important is this deal?
It is extremely important. I am not saying this because of my function as the director of the Pan African Chamber of Commerce and Industry [PACCI] or any ideological or theoretical grounds, but because we have seen repeatedly the positives free trade has brought to nations. In the fifties and sixties, countries that remained open or took advantage of international opportunity in one way or the other, and we can mention many of the Far Eastern economies, they first began by looking inward but then decided to go outward in the 1960. The results have been remarkable that ended up producing very high rates of growth to go along with their export performances. Countries that turned inward, countries such as India, Brazil, Ghana, Egypt, and others did not progress very far.
Let’s talk about the business community, how supportive are African businesses of free trade?
African businesses are very supportive of free trade, that’s me saying, and I believe it to be true. The problem of course is that very little is known about the degree of popular support for such an initiative. For Africa the free trade agreement to be launched on March 2018 is a new experience; it is a powerful engine for spreading prosperity. Basically the focus of this CFTA is on access to markets between member countries. Having said this, we have to understand things will not change from one day to the next, to be realistic African countries need first to promote a well-functioning cooperation among themselves at state levels, in particular between the customs administrations. They have to quickly simplify their import-export processing. They also have to take a step forward in liberalizing their internal trade.
Is the CFTA genuinely going to help the poorest countries?
That's the concern of many people. But look: exports were what allowed China to grow. We haven't seen poverty fall dramatically in any country that kept itself closed. So it’s essential for African countries’ economic development. Let’s look at the challenges developing economies face. Their labor productivity is low relative to the rest of the world, and that means their incomes are low. How do you raise labor productivity? You bring in new capital, and a lot of the times you do that through importing. But to import, you have to export. Opening up to the rest of the world allows you to vastly expand the markets for the stuff that you make, and in return for those exports you are capable of importing goods and capital and technology that make you get better at what you're doing. At least this is the type of argument that has prevailed till now.
Are you confident that this story is shared by many economists and decision makers?
I think the fair statement to make is that trade is a necessary but not sufficient condition for poverty reduction. As you know there are many countries that have taken the market liberalization route and haven’t seen big reductions in poverty. Would economists say, "Trade globalization is the magic bullet; adopt it and you will see massive reduction in poverty in the country." I don’t think so. The evidence just doesn’t support that. I think the evidence also doesn’t support the idea that you can have massive reductions in poverty without free trade. I think we've come to realize that when you talk about development, trade policy is one of many changes that need to happen in a society to allow income growth to occur.
Do SMEs and large companies benefit equally from the CFTA?
Let me start by saying that small and medium firms account for up to 90% of all businesses in Africa. Today, these small and growing businesses create around 80% of the continent’s employment. These are basically PACCI’s constituents and we believe that the CFTA benefits generally the SMEs. Many SMEs export their products and services to other countries and we note that size is not necessarily an obstacle. There are many SMEs around the world that use free trade agreements on a regular basis. The globalization of value chains also affects many SMEs, which means that they – as well as large companies – can improve their competitive standing by using free trade agreements.
The African Union was tasked to organize the negotiations leading to the signature of the CFTA on March of this year in Rwanda, to what extend the private sector was involved in the negotiations?
The private sector’s participation varies from country to country, meaning it went from extensive, say in the case of countries like Mauritius, to practically nil in the case of my country, Ethiopia. At the AU Commission level the attention given to the private sector like PACCI was rather minimal. I understand that trade negotiations are the domain of governments, but that should not have precluded consultations both at national and the AU Commission level. Anyway we’ll see if things change for the next phase, which is the most important phase – that of the implementation of the CFTA.
But I understand there is one full day dedicated for business at the Summit in Kigali, so there must be some kind of business involvement in the CFTA?
Well the Summit, which by the way is a historic event, has to have a showy and attractive part that week. A CFTA signing agreement without any business participation would have looked a bit strange. I understand the Business Day is organized by a newly established organization led by Dangote to promote African multinationals. All the big African business CEOs will be there gracing the Summit with their presence.
The SPE team have the pleasure to confirm to you the new dates for Sudan Poultry Expo , 10th Session will be on 20th to 23rd February 2019, at Khartoum International Fair Ground and is on schedule.
SPE is a major specialized event dedicated to development of poultry , livestock and agricultural production in Sudan and the rest of Africa , with animal number exceeding 140 million cattle, one of the largest in Africa and Middle East. SPE 9th Session will witness a dramatically change in exhibitors and visitors due to constant development to the event and rapid development and leap frog growth of poultry industry in Sudan , this led to doubling in stands sold at SPE for this session .
With its spacious halls and spectacular gardens KIFG avails to the organizer ,exhibitors and visitors a wide range of services and it is considered as one of the leading venues in Africa and Middle East in addition to the charming city Khartoum .
SPE has been widely promoted in international events and magazines.
The coming session of SPE will be held Under the Patronage Of H.E. Minister of Animal Resources and Under Auspices of Ministry Of Animal Resources ,Ministry Of Trade ,and Ministry of Agriculture and Animal Resources Khartoum State ( Sudan).
and supported by :
* Sudanese Veterinary Association
* Sudanese Agricultural Council
* Sudan Poultry Science Association
* Sudan Chamber of Commerce
* Middle East & North Africa Poultry Magazine ( MEAP )
10th session of SPE will include the Following sectors
* Sudan Dairy & Meat Cattle Show
* Sudan Fish Tech Show
* Milk Technology Show
* Refrigeration Exhibition
* Poultry , Meat and Milk Festival
We bring to your attention a call for applications for MSc and PhD Scholarship opportunities at the African Centre of Excellence in Sustainable Agriculture and Agribusiness Management - a World Bank sponsored project (ACE - II) in Egerton University.
Further details are at.
CESAAM Advert 2018.jpeg (0,1MB)
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)