In this section, you may find new materials that have been published on the topic of “Regional Trade in Africa: Drivers, Trends and Opportunities” , since the date of the event. We continually select major new publications and articles that add up to the policy points discussed in this briefing.
African Continental Free Trade Area: A New Horizon For Trade in Africa
Council on Foreign Relations; 10/06/2019
On May 30, the African Continental Free Trade Agreement (AfCFTA) officially went into force. The agreement, signed by all but three of Africa’s fifty-five nations, establishes the largest free trade area in the world since the creation of the World Trade Organization in 1995. Once the remaining countries join, AfCFTA will cover more than 1.2 billion people and over $3 trillion in GDP. While AfCFTA promises to unlock Africa’s economic potential, the agreement still faces an uphill battle for implementation. The African Union launched AfCFTA negotiations back in 2015 with the hopes of boosting intra-African trade, which falls behind [PDF] trade within other regional blocs. Only 15 percent of African exports go to other African countries, compared to intra-trade levels of 58 percent in Asia and 67 percent in Europe. High tariffs and colonial-era infrastructure make it easier for African countries to export to Europe or the United States than to each other. Furthermore, overlapping membership in Africa’s eight Regional Economic Communities (RECs) hinders trade standardization and enforcement. AfCFTA, which establishes a single continental market for goods and services, seeks to increase intra-African trade by cutting tariffs by 90 percent and harmonizing trading rules at a regional and continental level. If successful, AfCFTA is expected to boost intra-African trade by 52.3 percent by 2022.
Africa’s continental free trade area comes into effect
After years of painstaking negotiations, the African Continental Free Trade Area (AfCFTA) agreement finally came into effect on May 30. Yet huge obstacles remain as African leaders iron out legislation on inter-state agreements and build the infrastructure needed to grow regional trade. In a major boost to the regional integration agenda, the first phase of the Africa’s continent-wide free trade agreement, signed by 44 African countries in Rwanda in March 2018, was finally completed last week. The agreement, which plans to expand regional trade by 54% by cutting tariffs on 90% of goods traded across the continent to zero, will now enter the implementation phase at an upcoming African Union conference in July. One of the agreement’s architects Carlos Lopes hailed May 30th as “Potentially the most important move towards Africa’s regional integration since the end of colonialism.”
Today, May 30, 2019, the African Continental Free Trade Agreement officially comes into force. Now, according to a recent Brookings Africa Growth Initiative policy brief, under a successfully implemented AfCFTA, Africa will have a combined consumer and business spending of $6.7 trillion in 2030. Indeed, Africa is home to the world’s largest free trade area since the establishment of the World Trade Organization, with nearly every country on the continent joining. This much-needed agreement and new free trade area are important achievements for the region’s economic development. Figure 2 puts into perspective the current gap between Africa’s intra-regional trade compared to other regions. In this light, the AfCFTA is critical because it could boost intra-Africa trade by 15 to 25 percent by 2040. This increased market access to other African countries has positive spillovers too, including improving the competitiveness of industries and enterprises, increasing opportunities for economies of scale improvements, and boosting the efficacy of resource allocation.
Boosting regional trade in Africa
Reducing tariffs and, more importantly, addressing non-tariff bottlenecks will support further regional trade integration on the African continent, according to a report recently released by the International Monetary Fund (IMF). In 2018, member countries of the African Union entered into an agreement to boost regional trade and economic integration by establishing the African Continental Free Trade Area (AfCFTA). The agreement aimed to eliminate tariffs on most goods, liberalise trade of key services, address non-tariff obstacles to intra-regional trade, and eventually create a continental single market with free movement of labour and capital. The report said tariff reductions should be complemented with policies to reduce non-tariff bottlenecks to trade. “Such policies should take centre stage in the effort to foster regional trade integration in Africa. Addressing poor infrastructure and trade logistics, including customs services and clearance procedures would provide much-needed support for intra-regional trade growth,” the report said. AfCFTA was ratified by 22 countries and was likely to take effect by July. Once operational, AfCFTA will establish a market of 1,2 billion people with a combined GDP of R36 trillion, according to Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz. Heinrich Krogman, economic analyst on international trade at Tutwa Consulting, told Farmer’s Weekly that all member states should lower tariffs, but without compliance to the agreements there will be no moving forward.
72% of African CEOs think the AfCFTA will have a positive impact on intra-regional trade (OBG)
The African Continental Free Trade Area (AfCFTA) will have a positive impact on intra-regional trade, 72 % of African CEOs think. This is the outcome of a survey published on May 9, 2019, by the Oxford Business Group (OBG). Baptized “Business Barometer 2019: Africa CEO survey,” the survey which was conducted on a face-to-face basis with 787 African CEOs also revealed that 84% of them have positive expectations of local business conditions in the coming twelve months. The respondents’ companies are based in eight African countries namely, Morocco, Kenya, Nigeria, Egypt, Ghana, Djibouti, Algeria and Côte d’Ivoire. 78% of them also indicated that their firms were planning at least one significant investment in the next twelve months. 38% think that the factor the most likely to affect their economy would be a rise in oil prices. The second factor being political or security instability in neighboring countries, according to 23% of the respondents. Interrogated on the most needed skills in their countries, 36% of the respondents revealed that leadership was most needed while research, development and engineering were chosen by 14% as the most needed competence.
Across the continent, African governments are taking steps to make agricultural trade freer. In June 2014, heads of state of African Union member countries issued a bold commitment to a series of measurable goals related to agriculture-led growth and food security on the continent. Tripling intra-African agricultural trade by 2025 was among the list of commitments. In 2018, the Regional Strategic Analysis and Knowledge Support System (ReSAKSS) issued a report on performance against this indicator. While overall trade increases were observed continent-wide, performance among countries varied considerably. Noting these trends, we at the Feed the Future Enabling Environment for Food Security projecthave developed a set of trade improvement scorecards for countries in sub-Saharan Africa that capture relative performance on a range of elements that underpin an effective trading system. The Intra-African Agriculture Trade Improvement Scorecards include: Three regional trade scorecards reflecting selected countries across Southern Africa, East Africa, and West Africa. Eight country-level scorecards covering Ethiopia, Ghana, Kenya, Mali, Niger, Nigeria, Senegal, and Uganda. An indicator summary note providing additional information on indicators and data sources.
Intra-African Agriculture Trade Improvement Scorecard: Southern Africa
The Southern Africa regional trade scorecard compiles publicly available and regularly updated data related to four key trade determinants that are actionable at the national level, including: (1) production capacity, (2) the cost of trade, (3) institutional efficiency, and (4) trade policies. Scores are individually evaluated and compared to sub-Saharan African country peers. The indicators align with determinants identified in the Regional Strategic Analysis and Knowledge Support System’s (ReSAKSS) 2018 Africa Agriculture Trade Monitor report and are described in the Intra-African Agriculture Trade Improvement Scorecards Indicator Summary. Countries covered in the Southern Africa regional trade scorecard include Angola, Botswana, Madagascar, Malawi, Mozambique, Namibia, South Africa, Zambia, and Zimbabwe.
Intra-African Agriculture Trade Improvement Scorecard: East Africa
The East Africa regional trade scorecard compiles publicly available and regularly updated data related to four key trade determinants that are actionable at the national level, including: (1) production capacity, (2) the cost of trade, (3) institutional efficiency, and (4) trade policies. Scores are individually evaluated and compared to sub-Saharan African country peers. The indicators align with determinants identified in the Regional Strategic Analysis and Knowledge Support System’s (ReSAKSS) 2018 Africa Agriculture Trade Monitor report and are described in the Intra-African Agriculture Trade Improvement Scorecards Indicator Summary. Countries covered in the East Africa regional trade scorecard include Burundi, Democratic Republic of Congo, Ethiopia, Kenya, Rwanda, South Sudan, Sudan, Tanzania, and Uganda.
Intra-African Agriculture Trade Improvement Scorecard: West Africa
The West Africa regional trade scorecard compiles publicly available and regularly updated data related to four key trade determinants that are actionable at the national level, including: (1) production capacity, (2) the cost of trade, (3) institutional efficiency, and (4) trade policies. Scores are individually evaluated and compared to sub-Saharan African country peers. The indicators align with determinants identified in the Regional Strategic Analysis and Knowledge Support System’s (ReSAKSS) 2018 Africa Agriculture Trade Monitor report and are described in the Intra-African Agriculture Trade Improvement Scorecards Indicator Summary. Countries covered in the West Africa regional trade scorecard include Benin, Burkina Faso, Cote d’Iviore, Ghana, Guinea, Liberia, Mali, Niger, Nigeria, Senegal, and Sierra Leone.
Intra-African trade: A path to economic diversification and inclusion
The debate on the benefits of trade has dominated this decade, and Africa has cast its vote for more and better trade with itself. In March 2018, African countries signed a landmark trade agreement, the African Continental Free Trade Area Agreement (AfCFTA), which commits countries to remove tariffs on 90 percent of goods, progressively liberalize trade in services, and address a host of other non-tariff barrier. If successfully implemented, the agreement will create a single African market of over a billion consumers with a total GDP of over $3 trillion. This will make Africa the largest free trade area in the world. What is less known about the AfCFTA is that its scope exceeds that of a traditional free trade area, which generally focus on trade in goods, to include trade in services, investment, intellectual property rights and competition policy, and possibly e-commerce. The AfCFTA is complemented by other continental initiatives, including the Protocol on Free Movement of Persons, Right to Residence and Right to Establishment, and the Single African Air Transport Market (SAATM). The scale of AfCFTA’s potential impact makes it vital to understand the main drivers of the agreement and the best methods to harness its opportunities and overcome its risks and challenges.
Agriculture and the African Continental Free Trade Area
Following on from an analysis of what continued liberalisation in the World Trade Organisation (WTO) may offer African agriculture in the 2017 publication ‘WTO: Agricultural Issues for Africa’, this book critically examines intra-African agricultural trade and what the liberalisation of this trade under the auspices of the African Continental Free Trade Area (AfCFTA) may mean for the continent. Much of the research presented here has had a genesis at the tralac capacity training ‘Geek Weeks’ where participants, including those from the NAMC, have worked to produce these individual chapters. This is a valuable part of the NAMC/tralac cooperation to enhance analytical and policy making capabilities in the region. A comprehensive review of African agriculture is provided in these chapters, with the overall historical perspective introduced to set a base for understanding the sector and regional perspectives presented to emphasise the diverse nature of African agriculture. Regional trading and tariff profiles show progress made in liberalisation and, more importantly, focuses on how the AfCFTA can contribute to ongoing liberalisation efforts.
How can the new African free trade agreement unlock Africa’s potential?
oecd-development-matters.org , 22/10/2018
Africa has an opportunity to show leadership on the world stage through strength in unity, as the rest of the world retreats from multilateralism and increases protectionism. For the first time in recent history, with the African Continental Free Trade Area (AfCFTA), Africa could wholly embrace intra-African relations, global trade, structural transformation and sustainable development. But for the agreement to succeed, businesses, which make up the backbone of the deal, need to be aware of their potential gains and be actively involved in its implementation, working alongside governments and regional institutions that are ultimately responsible for speeding up the process. The challenges to African trade have been immense: Africa only represents 2.4% of total global exports. Intra-African trade only represents 15% of total African exports (compared to 58% and 67% for Asia and Europe, respectively), even if the regions of Eastern and Southern Africa are outperforming Central Africa.
More regional trade in agricultural products can lift Africa’s economies
Rising demand for food in Africa can serve as an engine for economic development and improved nutrition across the continent. But for that to happen the region’s governments must invest more in developing their agri-industrial bases and boosting intracontinental trade in agricultural products, FAO Director-General José Graziano da Silva said today. Food imports to Africa have been rising for a number of decades, helping drive consumers towards less nutritious diets and contributing to higher levels of obesity — while at the same time limiting economic opportunities for domestic food producers, noted Graziano da Silva in remarks made at an event on the sidelines of the UN General Assembly. Pointing out that the value of Africa’s food market is expected to more than triple in value by 2030 to $1 trillion annually, he said that in addition to core investments, enhanced regional trade would be vital in unlocking opportunities for African food producers and processors in the future.
Africa is on the move. The signs of progress and growing prosperity are evident across the continent. The lives and livelihoods of millions of people are improving, and entire economies are growing at a brisk pace. These rapid changes are giving rise to even greater aspirations for the years ahead. Many African nations are pushing to achieve middle income status in the next 30 years, and a few others are gunning for high income status. These aspirations are attainable, but to realize them will require Africa’s agriculture sector and its food systems to more rapidly and sustainably deliver increased incomes, food security, improved nutrition, and wider economic opportunities. For all of the recent signs of progress, Africa still needs to move from food shortages to surpluses, boost benefi cial continental trade, and create millions of employment opportunities, particularly for women and youth. Business as usual will not achieve our goals; we must do more and do it more successfully. It is apt therefore that this year’s Forum is taking place in Kigali, Rwanda. Our host country in 2018, Rwanda, has recently been recognized by the African Union Commission as the top performing country at the continental CAADP Biennial Review.
Strengthening Regional Agricultural Integration in West Africa: Key Findings & Policy Implications
Syngenta Foundation for Sustainable Agriculture and and Michigan State University, June 2017
This publication presents key results from the Strengthening Regional Agricultural Integration (SRAI) program. SRAI was a major agricultural policy analysis and outreach initiative in West Africa between 2009 and 2017, supported by the Syngenta Foundation for Sustainable Agriculture (SFSA) and implemented by Michigan State University (MSU) and its West African partners. The program began in the aftermath of the 2007-2008 world food crisis. World rice prices had nearly tripled, the prices of other basic staples had spiked sharply, and several Asian grain exporters had imposed export restrictions in an attempt to hold down domestic prices. West African governments implemented policy measures that limited the full transmission of these international price spikes to their markets. Nonetheless, food prices in the region still shot up sharply and food riots broke out in many cities. The experience severely shook the confidence of many West African leaders in the reliability of international and regional markets as sources of food for their growing populations.
Chokepoints and Vulnerabilities in Global Food Trade
Chatham House, June 2017
Global food security is underpinned by trade in a few crops and fertilizers. Just three crops – maize, wheat and rice – account for around 60 per cent of global food energy intake.1 A fourth crop, soybean, is the world’s largest source of animal protein feed, accounting for 65 per cent of global protein feed supply.2 Each year, the world’s transport system moves enough maize, wheat, rice and soybean to feed approximately 2.8 billion people.3 Meanwhile, the 180 million tonnes of fertilizers applied to farmland annually play a vital role in helping us grow enough wheat, rice and maize to sustain our expanding populations.4 International trade in these commodities is growing, increasing pressure on a small number of ‘chokepoints’ – critical junctures on transport routes through which exceptional volumes of trade pass. Three principal kinds of chokepoint are critical to global food security: maritime straits along shipping lanes; coastal infrastructure in major crop-exporting regions; and inland transport infrastructure in major exporting regions. A serious interruption at one or more of these chokepoints could conceivably lead to supply shortfalls and price spikes, with systemic consequences that could reach beyond food markets. More commonplace disruptions may not in themselves trigger crises, but can add to delays, spoilage and transport costs, constraining market responsiveness and contributing to higher prices and increased volatility.
A Handbook on Regional Integration in Africa Towards Agenda 2063
CommonWealth.org, 16 March 2017
Echoing the calls of Kwame Nkrumah and other pan-Africanists that ‘Africa Must Unite’, continental integration and unity have been on the agenda ever since African countries gained political independence. African regional integration is seen as key to enhancing political cooperation at the pan-African level, and of promoting economic growth, development and poverty reduction to help achieve many of the Sustainable Development Goals. Despite its central place in the African Union’s Agenda 2063 and plans to establish a continental free trade area, there remain many political, economic and institutional challenges to deeper integration and effective implementation of regional trade agreements. A Handbook on Regional Integration in Africa: Towards Agenda 2063 provides a ready and accessible resource for trade policy-makers, parliamentarians, the private sector, academia and civil society, as well as the general public. Advising and informing on current dynamics, opportunities, challenges and policy options for Africa’s regional integration agenda, the publication is a unique resource for supporting capacity-building on African regional trade issues.