Current Trade News

The agreement, which entered into force in May, could be a major step for Africa's role in international trade, if the continent can overcome barriers to implementation.
The entry into force of the African Continental Free Trade Area (AfCFTA) on 30 May, after only three years of negotiations, is as an economic, political and diplomatic milestone for the African Union (AU) and its member states, crucial for economic growth, job creation, and making Africa a meaningful player in international trade. But the continent will have to work together to ensure that the potential benefits are fully realized.
A necessary innovation
With its advances in maintaining peace and security, abundant natural resources, high growth rates, improved linkages to global supply chains and a youthful population, Africa is emerging as a new global centre of economic growth, increasingly sought after as a partner by the world's biggest economies. Governments from across Africa have been taking a more assertive role in international markets, including through proactive diversification of trading partners, and the continent remains a strong advocate for the multilateral trading system.
However, this is not yet reflected in outcomes. The African Union does not have observer status at the World Trade Organization, despite diplomatic efforts in the past decade. Africa has less than a three per cent share of global trade, and the growing trend towards protectionism across the global economy may only increase the vulnerability of a disunited Africa. Its fractured internal market means that trade within Africa is lower than for any other region on the globe, with intra-African trade just 18 per cent of overall exports, as compared to 70 per cent in Europe.
The AfCFTA is the continent's tool to address the disparity between Africa's growing economic significance and its peripheral place in the global trade system, to build a bridge between present fragmentation and future prosperity. It is an ambitious, comprehensive agreement covering trade in goods, services, investment, intellectual property rights and competition policy. It has been signed by all of Africa's states with the exception of Eritrea.
It is the AU's Agenda 2063 flagship project, brought about by the decisions taken at the January 2012 African Union Summit to boost intra-African trade and to fast track the establishment of the Continental Free Trade Area. It builds upon ambitions enshrined in successive agreements including the Lagos Plan of Action and the Abuja Treaty. Access to new regional markets and reduced non-tariff barriers are intended to help companies scale up, driving job creation and poverty reduction, as well as attracting inward investment to even Africa's smaller economies.
The signing in 2018 of the instruments governing the Single Air Transport Market and the Protocol on Free Movement of Persons, Right of Residence and Right of Establishment provided another step towards the gradual elimination of barriers to the movement of goods, services and people within the continent.
Tests to come
However, while progress is being made towards the ratification of the AfCFTA, much remains to be done before African countries can fully trade under its terms. The framework for implementation is still under development, and the creation of enabling infrastructure that is critical for connectivity will take time to develop and requires extensive investment.
So, the first test for the AfCFTA will be the level to which Africa's leaders make it a domestic priority, and whether a consensus can be maintained across the AU's member states as the costs of implementation become clear.
There is no guarantee that the gains of free trade will be evenly distributed. They will mainly depend on the extent to which countries embrace industrialization, liberalization of their markets and opening of their borders for free movement of goods and people - policies that some incumbent leaders may be reluctant to implement. Political will to maintain a unified negotiating position with diverse stakeholders, including the private sector, will come under increasing stress.
A second challenge is how the AfCFTA relates to already existing trade arrangements, notably with the EU. The AU has long preferred to pursue a continent-to-continent trading arrangement instead of the bilateral Economic Partnership Agreements being sought by the EU under the African, Caribbean and Pacific (ACP) framework to which, with the exception of Algeria, Egypt, Libya, Morocco, Tunisia and South Africa, all African states belong. The signing of the AfCFTA is one important step towards making this possible.
But there are currently negotiations under the ACP to replace the Cotonou Accord (the framework governing trade between ACP members and the EU, including Economic Partnership Agreements [EPAs], that is due to expire in 2020). Negotiations on the African pillar of the accord are due to take place after the AfCFTA has entered into force. So African states and the AU will face the challenge of balancing their commitment to the ACP bloc with pursuing their own interests.
And though the AfCFTA should supersede any other agreements, the EPAs or their successors, will continue to govern day-to-day trading, in parallel to the new pan-African market. It is not yet clear how these contradictions will be reconciled.
A new role for the AU?
The AU will need to play an active role as the main interlocutor with Africa´s international trading partners, with the AfCFTA secretariat being the arbiter of internal tensions and trade disputes. The AU´s engagement at continental level has to date revolved mainly around headline political diplomacy, security and peacekeeping. With the continental free market becoming a reality, an effective pivot to economic diplomacy will be critical for growth and development.
With the AfCFTA, the AU has endeavoured to address Africa's unsustainable position in global trade, to stimulate growth, economic diversification and jobs for its growing population. Much will depend on the commitment of African leaders to maintaining a unified negotiating position to implement the agreement and the AU's capacity to effectively move from political to economic diplomacy.

11/ 12/ 2019 - South Africa Power Crisis - Severe Blackouts Shut Down Mines
South Africa is facing severe electricity crisis, causing power cuts and mine closures. President Cyril Ramaphosa has had to cut short his official visit to Egypt and come home to deal with the problem.

South Africa's state-owned energy company Eskom has been struggling to keep the lights on in the country. For the past six days, Eskom has been implementing "load-shedding," whereby power is cut for anything from two to four hours to businesses and households across the country in a bid to relieve pressure on the national grid.
On Monday, the energy firm said it was cutting up to 6,000 megawatts (MW) of power from the national grid after heavy rain and flooding triggered failures at its Medupi coal-fired plant. The problem is not new, as the company has been forced to enforce such power outages intermittently over the past decade.
On Tuesday, South African President Cyril Ramaphosa had to cut short his official visit to Egypt and head back home to deal with the power crisis.
"The ongoing load shedding is devastating," Ramaphosa said in a statement earlier on Tuesday. "The energy challenges in this country will not be resolved overnight." Presidential spokesperson Khusela Diko said Ramaphosa would meet with Eskom executives on Wednesday to be briefed on plans to resolve the crisis.
Loss-making Eskom generates over 90% of the nation's electricity.
Aggravating economic woes
The electricity problems have dealt a blow to the nation's already slowing economy and transportation, among other things. The mining sector, a key part of the nation's economy, has been hit hard, with companies shutting down mines across the country.
Harmony Gold, Impala Platinum and Sibanye-Stillwater all said they had been forced to cut production since Monday because of power shortages.
"There are very few underground mines that operated overnight and will be operating normally today," said a spokesman for the Minerals Council industry body. The mining industry contributed 351 billion rand ($24 billion, €21.65 billion) to the South African economy in 2018, the Minerals Council says, equating to about 7% of gross domestic product (GDP).
John Steenhuisen, leader of the main opposition Democratic Alliance, led a picket outside Eskom headquarters in Johannesburg on Tuesday, saying the "rolling blackouts" threaten to "throw the country's economy over a precipice."
Source: DW

Agriculture holds the promise of transforming Tanzania's economy better than any other sector according to the World Bank, but the government must first fix its policies and regulatory issues.
In its 13th Tanzania Economic Update report dubbed Transforming Agriculture, the World Bank bases its argument on the fact that agriculture provides more than 67 per cent of all the jobs in the country and contributes nearly 30 per cent to the country's total GDP.
"The current trends in agriculture and related value chains offer a tremendous opportunity to catalyze private investment, both local and foreign, and raise the incomes of the poor," said World Bank Country Director for Tanzania Bella Bird when he launched the report on December 3.
Tanzania experienced a steady rise of commercialized and more productive small-scale farmers to 25 per cent from 19 per cent between 2008 and 2014. The proportion of farms that were primarily subsistence-oriented and small-scale fell to 31 per cent in 2014 from 43 per cent in 2008.
"Since 2008, there has been a growing number of medium-scale farmers who have opened up opportunities for smallholder farmers through positive spillovers," reads the report.
About 368,000 medium-scale farms were added in the market, creating over 13 million days of hired agriculture workers.
"The 776,473 medium-scale farmers invest in technology and knowledge, and they attract commercial services that can provide a basis for tax revenue. And the effect of this is that small-scale farms on average improved their farming outcomes," said Holger Kray, World Bank agriculture practice manager and co-author of the report.
Agriculture contributes about $1 billion in earnings to Tanzania's foreign exchange kitty, mainly from cash crop exports -- coffee, cotton, sisal, cashew nuts, tobacco and tea.

EAST African businesswomen are calling for the establishment of a digital economy to facilitate women doing business in the region.
The women who met here last week under the auspices of the East African Women in Business Platform (EAWiBP) observed that they still lacked skills of doing business using digital economy.
They also decried the lack of regional accreditation for Women in business and the lack trust when doing online business among business women.
"We are calling the six partner states to establish a digital platform for showcasing products and services to boost regional trade and develop an EAC business accreditation policy," outlined Ms Nancy Gitonga, the platform's regional coordinator while delivering the recommendations from women in business focal points from the six partner states at a consultative workshop on mainstreaming gender-related challenges in the EAC regional agenda.
The East African businesswomen opined that creating a database for the service providers as business centre will help them access business services across EAC partner states.
They also rooted for the formulation of a creative technological based service platform for linking farmers and traders for enhancing trade as well as establishing women in business innovation and incubation hubs within the EAC.
"There's limited digital infrastructure that can benefit women small and medium entrepreneurs there it is equally important to have such platforms," suggested the EAWIBP regional coordinator.
EAWiBP also wants the inclusion of its members in the EAC Common External Tariff(CET) review team.
Among other things, the review team will seek to breathe life into the stalled review of the EAC's (CET), a project that has delayed for over two years after the member states failed to reach a consensus on how to change the three-band tariff structure.
The EAC partner states have failed to reach a consensus in three consecutive meetings, every time going back to do "further consultations" in their home countries.
Talks on the CET dispute which largely revolves around the number of tariff bands to be included in the new taxation structure and the type of goods to be put in each new band, were scheduled to in October this year.
In the same vein, the businesswomen called for the sensitization and awareness creation of women in business on the African Continental Free Trade Agreement (AfCFTA) which came into force in May 30 this year.
The women rooted for funding and building of resources within EAWiBP for dissemination on the AfCFTA policy and capacity building for the women in business to leverage its benefits.
EAWiBP is a forum that brings together business and professional women from across the EAC.
It draws its mandate from the Treaty for the Establishment of East African Community, particularly under Chapter 25 and Articles 121 and 122 and is inspired by the vision of becoming "A Women's Centre of Excellence for Intra and Extra-EAC Trade".

Dar es Salaam — Rising demand for meat, compounded by low cattle supplies, has pushed meat prices up in Dar es Salaam, with analysts projecting that a kilogramme of beef will cross the Sh10,000-mark during the festive season.
Basically, the commercial city has two types of meat retailers. There are those traders who buy live cattle; slaughter them and retail the same in their butcheries.
Shops operated by these traders are retailing a kilogram of beef at Sh6,500. The other category comprises of a majority of butchery operators in the commercial city dealing mainly with those who buy slaughtered meat at wholesale prices at the Vingunguti Abattoir.
With wholesale prices rising by an average of 21 per cent during the past one month, retailers in the second category have also pushed theirs (retail prices) up.
"Currently, a kilogram of beef at the Vingunguti Abattoir fetches between Sh6,300 and Sh6,500 as wholesale price. Two months ago, the same fetched between Sh5,000 and Sh5,500. What you see in retail outlets is a reflection of what is happening here," the chairman for a co-operative union for traders in livestock and livestock products at Vingunguti, Mr Joel Meshaki, told The Citizen in an interview.
In a number of retail outlets, a kilogram of beef currently fetches between Sh7,500 and Sh8,500.
According to Mr Meshaki, the rise is largely due to a slowdown in cattle supply at the market. Currently, an average of 400 and 450 cattle are slaughtered at Vingunguti per day, a drop from an average of 500 and 650 during times of normal supply.
The market master at the Pugu Livestock Market, Mr Kerambo Samwel told The Citizen that the rise has been associated with a drop in cattle supply at the market from source regions of Geita, Mwanza, Rukwa, Morogoro, Mara, Arusha, Simiyu and Tabora. Cattle supplies started to dwindle in September and October, but it they slowly but began to rise towards the end of November.
"In September, we received 33, 390 cattle here at Pugu Market. We sold 32 804 of them. In October, the number dropped to 28, 961. We filled the gap for demand by selling the 586 cattle that were brought here in September and those that had been kept here for some time. That way, we were able to sell 30,738 cattle in October," he said.

In November, a total of 29, 353 cattle were supplied to Pugu Market while the total number of cattle sold stood at 33,190.
A decrease in supply, said Mr Samwel, was largely due to availability of pasture as rains started falling in some source regions. Some livestock keepers were also hoarding their livestock in anticipation that they will get better prices during the festive season.
A cattle trader at Pugu Market Mr Mengi Nollo said most of the livestock from Mwanza region are currently sold in Kenya through Sirari boarder.
"There is a huge livestock market at Sirari. We currently receive cattle from Shinyanga, Simiyu and Tabora," he said.
According to Mr Meshaki some cattle from upcountry regions ends up in Dodoma where meat demand has increased since the government relocated its operations from Dar es Salaam to the capital city.
Mr Maelo Machage, a cattle trader at Pugu Market said he used to pay Sh500,000 for a 120-kilogram cow but the same now costs him Sh800,000.
A cow weighing 260 kilograms currently fetches up to Sh1.6 million from Sh1.2 million a few months ago.


Access to credit, which can be a true lifeline for micro, small, or medium sized businesses, remains one of the key challenges that individuals and small companies face in Malawi.
RBM Governor Dalitso Kabambe ICF's Madalo Minofu (2nd right) Kapito (2nd left) stressing a point during the panel discussion
This was said by World Bank Group's International Finance Corporation's Resident Representative for Malawi and Zambia, Madalo Minofu at the launch of the 2019 Credit Awareness Week graced by the Governor of the Reserve Bank of Malawi, Dalitso Kabambe, who is also the Registrar of Financial Institutions.
With support from the World Bank, the initiative is to increase the general public and specific target groups' awareness and understanding of the merits of accessing and borrowing money from licensed or registered lending institutions including banks, microfinance institutions and savings and credit cooperatives (SACCOs) as opposed to borrowing from informal lending institutions.
Minofu said if a business can access credit, it can grow and create jobs, leading to a stronger, more productive economy and a better quality of life.
"As we are gathered here today to launch the credit awareness week in Malawi, I would like to re-iterate the World Bank Group's continued commitment to helping Malawi develop a strong and sustainable financial sector, including through credit infrastructure," Minofu said.
"Credit infrastructure is one of the building blocks that allows financial institutions and other lenders to grow their portfolios -- increasing access to credit and, at the same time, maintaining financial stability.
"It protects the interests of financial institutions and lenders, and it also protects the rights of borrowers."
She observed that over the past years, Malawi has made incredible strides in enhancing its credit infrastructure -- including through its well-functioning and modern collateral registry and improving its credit reporting system.
One of the partners to the awareness campaign are credit reference bureaus, that will be sharing with the public their importance in order to access credit facilities from financial service institutions.
Credit reference bureaus provide a potential loan borrower's credit history that is passed on to financial institutions for them to make informed decisions whether to award the loan or not.
This is one other system that clients can use their credit reputation as collateral apart from using moveable collateral.
Minofu said for credit to truly have a positive effect on the lives of Malawians, credit providers and consumers alike need to better understand their rights and obligations when it comes to lending and borrowing.
"For this reason, initiatives like this credit awareness week are critical; by spreading financial education and awareness to communities, workplaces, and places of worship, you are helping all Malawians take control of their financial future.
"Malawians should feel empowered to use their credit history as a tool to access credit with better terms and conditions; understand how credit works and borrow responsibly; and feel confident that their rights as consumers are also protected in the process.
"It is also our hope as International Finance Corporation that all Malawians -- whether a small business owner, an entrepreneur, a salaried employee, or even a student -- will become financially healthy and check their free credit report once a year."
She congratulated the Reserve Bank of Malawi for organizing the credit awareness week and for Kabambe's steadfast partnership with IFC and dedication to improving access to finance in Malawi.
One of IFC's financial partner, the Kingdom of Denmark, is supporting the credit infrastructure work in Malawi.
There was also a panel discussion at the launch that involved Kabambe himself, Consumer Association of Malawi executive director, John Kapito; Bankers Association of Malawi president, Kwanele Ngwenya (who is also chief executive officer for NBS Bank); Malawi Union of Savings & Credit Cooperatives (MUSCCO) CEO Fumbani Nyangulu and Rogers Lungu, representing credit reference bureaus.
They all touched on the importance of understating credit terms and conditions such interest rate, repayment period, short term or long term loan, consequences of default before signing a credit agreement between a lending institution and a borrower.
They also talked on consumer rights and obligations when accessing credit and the benefits of accessing and using credit history reports from credit reference bureaus for informed financial decision making.
Kapito asked the RBM Governor if the commercial banks and other lending institutions must always civic educate clients before they sign loan forms on some of the conditions that are always attached but presented in fine print, which are not always known by the client.
"Some people have fallen into credit traps because they did not know of some of the loan conditions which were written in fine print," Kapito said.
"After a client has been paying for a while, and thinking that they have completed the loan, they discover to their horror that what they have been repaying was the interest and that they need to start repaying the premium.
"The banks need to sensitise the clients on all conditions attached because in most cases people needing a loan are always desperate for the money and don't have the patience to go through the fine print," he said.
Kapito said the awareness campaign should also sensitize people that they should not borrow when there is a need only but when they identify an opportunity for that loan to make more money.
Kabambe, who said it is unfortunate that out of the Malawi's total population, only 3 percent are accessing credit facilities because of financial illiteracy, which the awareness campaign aims at addressing.
He said others opt to borrow from loan sharks (katapila), which does not protect the interest of the borrower and in most cases, they fall into credit traps that end into seeing their property confiscated.