Browsing: African Continental Free Trade Area

Digital payments in Africa
  • An infusion of new investments and regulatory transformations is shaping financial interactions and digital payments in Africa.
  • Africa’s digital payments operations produced around $24 billion in revenue in 2020, comprising domestic and cross-border payments.
  • For Africa’s digital transition to run smoothly, a cohesive environment that ensures investment and funding remains necessary.

Human commerce constantly seeks more efficient exchange mediums, and this innovation is currently intensifying. Consequently, how individuals pay for products and services has changed dramatically in the 21st century. Digital payments in Africa are gradually replacing cash, and cryptocurrencies and virtual currencies have lately emerged as substitutes for conventional money concepts.

Africa has kept up with, and in some instances led, technological advancement. An infusion of new investments and regulatory transformations is shaping financial interactions and digital payments in Africa. Cash remains king in Africa. However, research indicates that its dominance may be challenged in the future years as …

Japan - Africa
  • African Development Bank tells Japanese investors putting their money in the continent is profitable.
  •  Japan’s Foreign Direct Investments in Africa declined from $10 billion in 2016 to just $4.7 billion in 2020 during Covid-19, before picking up to $6 billion in 2021.
  •  According to AfDB, Africa accounts for only 0.003 percent of Japan’s $2 trillion global Foreign Direct Investments.
  • Japan’s Prime Minister Fumio Kishida announced during the TICAD 8 Summit in Tunis last year $30 billion for Africa, including support for startups.

Africa is keen to increase Japanese investment in the continent, the African Development Bank (AfDB) has indicated amid growing interest from other countries including China, Europe and the US.

The move comes after a slump in Japan’s Foreign Direct Investments (FDIs) in Africa, which declined from $10 billion in 2016 to just $4.7 billion in 2020 during Covid-19, before picking to $6 billion in 2021.

According to AfDB, …

African Trade

The rising commodity prices, surging inflationary pressures, and the contracting global financial situation have risked African trade and production capabilities. Moreover, the rising threat of sovereign defaults poses a severe risk to the growth of African trade. Thus, African trade prospects remain unclear, considering the challenging global economic scenario.

The Covid-19, energy and food shortages have hit with the countries having minimal or no policy space to respond. As a result, African countries have fallen into a real risk of debt distress and even possibilities for sovereign debt default.…

For historic reasons, bilateral and regional trade in Africa has been hampered by trade routes designed for export away from the continent rather than for facilitating intra-Africa trade. Obstacles include long distances, inadequate transport services, and inefficient institutional and transit regimes.

In many landlocked African countries, economic centres are located several hundred kilometres away from the closest seaport. Overcoming geographic constraints or the lack of economies of scale caused by small transportation volumes is key for all countries, particularly transit countries. A renewed focus on the efficiency of transport and logistics services is long overdue, given that many countries retain policies that favour closed, small, and inefficient services markets.

By committing to no new barriers to services trade during the progressive liberalization process, at least in the five priority sectors—business, communication, financial, transport, and tourism services, and with declining trade costs—the transport sector is bound to expand.…

The African passport is a common passport document that is set to replace the existing nationally issued AU member states’ passport, and exempt bearers from having to obtain any visas for all 55 states in Africa. The three types of AU passports that are to be issued include the Ordinary Passport which is 32 pages and valid for five years, that will be issued to citizens and is intended for occasional travel such as business trips and vacations. The Official or Service passport will be issued to officials attached to government institutions, who have to travel on official business.

Finally, the diplomatic passport will be issued to diplomats and consuls for work-related travel and to their accompanying dependents. The passport has inscriptions in English, Swahili, Arabic, French and Portuguese.

The initiative aims at transforming Africa’s laws, which remain generally restrictive on the movement of people. This, despite political commitments, to…

AfCFTA supports women in trade.

AfCFTA is reshaping African markets; deepening economic integration in accordance with the Pan African Vision of ‘An integrated, Prosperous and Peaceful Africa,’ as enshrined in Agenda 2063. The agreement established a single continental market for goods and services, making for the largest and most ambitious trade bloc in the world, after the WTO. This has created a new market of 1.3 billion consumers across Africa, accounting for a combined GDP in excess of US$3.4 trillion in 55 countries.  

According to the World Bank, AfCFTA has the potential to eradicate extreme poverty in the lives of 30 million Africans, and boost the incomes of 68 million of them, that live below the poverty line. Moreover, in the long term the continent is set to immensely reap more benefits out of the Agreement such as the diversification of Intra African trade, elimination of barriers and tariffs, job creation, increase in wages for…

Youths in Djibouti. Migration has many advantages to Africa's economy which is now recovering, or dealing with the aftermath of the Covid-19 pandemic.

Because emigrants bring with them more than just economic needs from their home countries, migration is a trade stimulant in and of itself. With this movement, there is increased demand for housing, food, transportation and other services which are beneficial to local economies. 

In addition, migrants can serve as bridges to a wider market because they promote trade and tourism in their home countries, thereby creating demand. 

The diaspora population's needs can be met if the African economy is stimulated by the trade-in African heritage. While there are many reasons for migration, one of the most important is joblessness, both within Africa and to other parts of the world. …

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The signed trade deals between the DRC and Kenya. East African authorities and citizens are working hard to make the coast to coast economic bloc strong and long-lasting.

For starters, this is good news for the landlocked countries. It means that the landlocked countries in the EAC including Uganda, Burundi, Rwanda and South Sudan now have another coastal gateway away from the East African one in Kenya and Tanzania.

In addition, all the partner states have better bargaining power when it comes to trading with other blocs on the continent or internationally.
With the African Continental Free Trade Area (AfCFTA), the deal gets even sweeter.

Continent-wide, fully implementing the AfCFTA will increase intra-African trade with the elimination of duties. Projections show that by just reducing non-tariff barriers (NTBs), intra-African trade could double.…

Testing a section of the SGR in Tanzania. Tanzania is edging closer to dominating East Africa’s transport sector with the latest SGR line financing.

Implementing the AfCFTA fully will increase intra-African trade through the elimination of import duties. By just reducing non-tariff barriers, intra-African trade could double.

The implementation of the Free Trade Area will lead to an increase in intra-African freight demand of around 28% by 2030 in comparison to a scenario without its implementation. Specifically, demand for road, rail, maritime and air freight will increase by 22%, 8%, 62% and 28% respectively.

According to the United Nations Economic Commission for Africa (ECA), the modal share on rail would increase from 0.3% to about 7% with Africa requiring close to 2 million additional trucks, over 100,000 rail wagons, 250 aircraft, and more than 100 vessels by 2030, if the AfCFTA is fully implemented.

Aircraft demand to support trade flows within West Africa will increase by 13.2% by 2030 while trade between North and West Africa would increase demand for aircraft by 12.9%. Within …

A woman with her produce in a market. AfCFTA should bring in more women to trade.

Women’s role in trade and economic growth is significant and across Africa; they have mostly worked in export-oriented industries like textiles and clothing, agriculture, and tourism. 

For long, women have been stuck in low-paid labour but with increased demand for skills, things are changing. The AfCFTA offers an opportunity for African women to take a deep dive into the opportunities it offers. Women are now taking on more jobs in wholesale and retail trade, finance, business services, and hospitality which have prepared them for the opportunities that the continent offers under the trade agreement.  

Intra-African trade is expected to rise by between 33 per cent and 52 per cent but this is dependent on how much tariff liberalisation takes place between African countries.…

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