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AfCFTA Will Double Intra-Africa Trade Flows—Anatogu

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Intra-Africa Trade Flows

By Adedapo Adesanya

The African Continental Free Trade Area (AfCFTA) will help to deepen economic integration in the continent, says the Senior Special Assistant to the President on Public Sector Matters and Secretary of the National Action Committee on AfCFTA, Mr Francis Anatogu, as part of a continued effort to drive implementation.

Mr Anatogu also said that AfCFTA’s goals will also improve and expand intra-Africa trade, enable rule-based engagement for facilitating dispute resolution and addressing injurious trade practices.

He made this known on Monday at a leadership stakeholders’ consultation on the theme ‘Defining the Trade in Service Strategy for AfCFTA’.

Mr Anatogu said the agreement will also serve as the foundation for the establishment of a continental Customs Union.

He expressed optimism that if effectively implemented, the AfCFTA will result in the elimination of tariffs on 90 per cent of tariff lines, adding that product-specific rules of origin will help to grow African content.

Mr Anatogu also stated that the pact would assist in the harmonisation of policies, regulations and standards, as well as lead to customs co-operation and mutual administrative assistance.

The AfCFTA, according to him will double intra-Africa trade flows, currently at 15 per cent as well as double Africa’s share of world trade from three per cent to six per cent over the next 10 years.

In a similar vein, Professor John Aremu said at the forum that while it is right for Nigeria to ratify the agreement, the constitution provides that such treaties entered into can only become beneficial to the nation if it has a place inside the Nigerian law to guarantee enforceability.

Mr Aremu, who is a Professor of International Economic Relations at Covenant University, urged stakeholders to facilitate the domestication of AfCFTA as enshrined in the constitution, in order to ensure utmost benefits accrues to Nigeria.

The academic who doubles as a consultant of ECOWAS Common Investment Market stated this during his presentation titled “Conceptual Issues in Africa Integration Emergence of AfCFTA, and Its Protocol”.

He said, “If AfCFTA cannot be domesticated into the national law, it cannot be deployed in defence of cases involving their violations before courts of law in the country, neither can they be used for the advocacy of rights within the country.

“Further to this, violators of AfCFTA provisions, whether they be institutions, companies or individuals cannot be held accountable, since the AfCFTA treaty has not been domesticated in the country”.

This he said can be supported by section 12(1) of the constitution of the Federal Republic of Nigeria, 1999, about Implementation of treaties which states that “no treaty between the federation and another country shall have the force of the law except to the extent to which any such treaty has been enacted into law by the National Assembly”.

He further said failure or lateness for Nigeria to domesticate AfCFTA will cause unreasonable hardship on other AU member states that intend to have commercial relationships with the country under the continental economic integration.

This he said will further discourage reading and affect the inflow of investments into Nigeria and also stunt the growth of the law in the country.

He also advocated the need for an upgrade of the overall quality of the nation’s physical infrastructure like roads, rail, port facilities, telecommunications, which are prerequisites to profitable intra-African trade

The professor also called for the use of an online information portal, single windows, digital documentation, Pan African Payment and Settlement System (PAPSS), electronic Certificates and signatures and automated processing of trade declaration which would help simplify, streamline and expedite trade-related procedures at the borders.

For Nigeria to fully benefit from AfCFTA, Professor Aremu said Nigeria must reduce the infrastructural deficit by building on ongoing efforts and also reduce other critical NBTs such as customs and other administrative requirements that directly affect the capacity of economies to trade merchandise within and outside their borders.

Other suggestions from Professor Aremu include improving trade facilitation commitments of the country as regards categories A, B, and C with WTO/TFA as a priority area for reforms while also ensuring a strong institutional and governance framework in the implementation of AfCFTA.

On commencement of AfCFTA, the Don said beyond boosting Intra-Africa trade, the larger market offered by AfCFTA is expected to trigger investment, leading to high productivity and addition to the continent’s value chain, providing more and better jobs and further enlarging the continental market.

Additionally, he said despite the high level of political momentum around AfCFTA, the ultimate success depends on African states not merely ratifying the treaty but repositioning themselves towards complying with demands in the AfCFTA.

He said while other continents have increased intra- trade among them, Africa still lags behind in trading within itself.

“Intra-Africa trade is about 12 per cent, compared to North America Free Trade Area (NAFTA) of 40 per cent and 63 per cent between economies of Western Europe and 30 per cent for ASEAN.

“There can never be any good reason why it is easier for us to trade with Asia, Europe and America, rather than with fellow Africans” Professor Aremu quoted former Ghanaian President, John Mahama as saying.

The academic said African countries can improve intra-trade among themselves by adopting trade diversion, which entails abandoning the lowest cost producer like China and importing the same product from a member of the union.

Mr Aremu also said the policy of trade creation where the country with comparative advantage is allowed to produce a particular product while others patronize it can be employed.

“By bringing down the barriers to trade between Nigeria and Egypt, the imports from Egypt will become cheaper than the ones produced by companies within Nigeria and those imported from China, since import duties remain on China, thereby creating more trade from Egypt,” he narrated.

Mr Aremu lamented over Africa’s contribution to global trade volume and blamed the lack of proper renegotiation of global agreements to integrate the continent and increase her participation in the global trade.

According to him, “Africa accounts for about 3 per cent of the global trade despite Doha Development Agenda (DDA) of the WTO, AGOA of USA and ECAs of EU; all of which have not been negotiated to enable Africa’s successful integration into the global economy despite promises”.

Speaking further on the African situation, he said: “Africa accounts for just 2.4 per cent of global GDP; has approximately 30 per cent of the earth’s remaining mineral resources; largest reserve of precious metals, over 40 per cent of gold reserves, over 60 per cent of cobalt and 90 per cent of platinum reserves, yet Africa is the world’s poorest and underdeveloped”.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

World

St. Petersburg to Hosts Second African Leaders Summit

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Second African Leaders Summit

By Kester Kenn Klomegah

With high optimism and a desire to strengthen its geopolitical influence, Russian authorities are gearing up to hold the second African leaders summit in St. Petersburg scheduled for early November 2022.

The gathering, as expected, will focus on enhancing further constructive cooperation and advancing integration processes within the framework of the African Union and a number of sub-regional structures.

In their first joint declaration, emerging from the Russia-Africa summit at the initiative of African participants a new dialogue mechanism—the Russia-Africa Partnership Forum—was created.

The declaration stipulated that all top-level meetings take place within its framework once every three years, alternately in Russia and in an African state. It says further that the foreign ministers of Russia and three African countries—the current, future and previous chairpersons of the African Union—will meet for annual consultations.

Understandably, St. Petersburg, the preferred venue, was chosen primarily due to the continuous political instability in Addis Ababa, Ethiopia. Initially, Moscow bagged hopes on using the Chinese financed and newly constructed African Union headquarters which has modern facilities for large-scale international conferences and the city itself easily accessible with effectively built first-class Ethiopian Airlines network to and from many African countries. An additional advantage is that African government representatives and heads of many international organizations work in this city.

South Africa and Egypt, as possible alternatives, were thoroughly discussed as South Africa and Russia are members of BRICS, and Egypt has excellent post-Soviet relations. Reminding that the first summit held in Sochi was co-chaired by President Vladimir Putin and Egyptian President Abdel Fattah el-Sisi, who also rotationally during that year headed the African Union.

The large-scale Russia-Africa summit, held in Sochi in October 2019 and described as the first of its kind in the history of Moscow’s relations with Africa, attracted more than 40 African presidents, as well as the heads of major regional associations and organizations.

According to official documents, there were a total of 569 working meetings that resulted in 92 agreements and contracts, and memoranda of understanding signed as part of the summit.

The first summit opened a new page in the history of Russia’s relations with African countries. Sochi witnessed a historic final communiqué and impressive pledges and promises were made in various speeches and discussions.

Last November, a group of 25 leading experts headed by Sergei A. Karaganov, the Honorary Chairman of the Presidium of the Council on Foreign and Defence Policy, released a report that vividly highlighted some spectacular pitfalls and shortcomings in Russia’s approach towards Africa.

It pointed to Russia’s consistent failure in honouring its several agreements and pledges over the years. It decried the increased number of bilateral and high-level meetings that yield little or bring to the fore no definitive results. In addition, insufficient and disorganized Russian African lobbying combined with a lack of “information hygiene” at all levels of public speaking, says the policy report.

Writing early January on the policy outlook and forecast for 2022, Andrey Kortunov, Director General of the Russian International Affairs Council (RIAC), acknowledged the absolute necessity for consolidating Russia’s positions in Africa.

“A second Russia-Africa summit is planned for the fall of 2022. Its first edition, held in Sochi in October 2019, raised many hopes for the prospects of an expanded Russian presence in Africa. Obviously, the COVID-19 pandemic has made some adjustments to these plans, preventing the parties from reaching the expected levels of trade and investment.

“Nevertheless, Africa still retains a considerable interest in interaction with Russia, which could act as an important balancer of the prevailing influence of the West and China in the countries of the continent,” he opined.

Kortunov suggested, therefore, that 2022 could become a “Year of Africa” for Moscow, a year of converting common political agreements into new practical projects in energy, transport, urban infrastructure, communications, education, public health, and regional security.

Some policy experts expect high symbolism at the 2022 Russia-Africa summit. For example, Andrey Maslov, Head of the Centre for African Studies at Moscow’s Higher School of Economics, said that preparations for the second summit would shape the Russia-African agenda; visits would become more frequent and Africa would receive greater coverage in Russian media.

Instead of measuring the success of the summit by how many African leaders attended, as happened in 2019, the parties will finally give greater attention to the substance of the agenda, which is already under development. Russia should try to increase its presence in Africa while avoiding direct confrontation with other non-regional and foreign players, he underlined.

According to him, the volume of Russian-African trade increased, for the first time since 2018, diversifying both geographically and in the range of goods traded. Shipments of railway equipment, fertilizers, pipes, high-tech equipment and aluminium are growing and work continues on institutionalizing the interaction between Russia and the African Union.

“A number of conflicts are also causing alarm, primarily those in Ethiopia, Libya, Guinea, Sudan and especially the Republic of Mali where France and the EU are withdrawing their troops. In 2022, Russia will try in various ways to play a stabilizing role for Africa and assist in confronting the main challenges it faces – epidemics, the spread of extremism and conflicts, and hunger,” Maslov told The Moscow Times.

A dialogue would begin on Africa formulating its own climate agenda, he said and added: “Africa is beginning to understand that it does not need a European-style green agenda and will demand compensation from the main polluting countries for the damage the climatic changes have caused to the ecosystems of African countries. Russia is likely to support these demands.”

In an emailed interview, Steven Gruzd, Head of the African Governance and Diplomacy Programme at the South African Institute of International Affairs (SAIIA), said Russia needs to upgrade or scale up its collaborative engagement with Africa. It has to consider seriously launching more public outreach programmes, especially working with civil society to change public perceptions and the private sector to strengthen its partnership with Africa. In order to achieve this, it has to surmount the challenges, take up the courage and work consistently with both private and public sectors and with an effective Action Plan.

He told IDN: “I would largely agree that there is a divide between what has been pledged and promised at high-level meetings and summits, compared to what has actually materialized on the ground. There is more talk than action, and in most cases, down the years intentions and ideas have been presented as initiatives already in progress. It will be interesting to see what has been concretely achieved in reports at the forthcoming second Russia-Africa summit scheduled for late 2022.”

Despite the challenges, Moscow plans to boost Russia’s presence in Africa noted Gruzd who also heads the Russia-Africa Research Programme initiated last year at SAIIA, South Africa’s premier research institute on international issues. It is an independent, non-government think tank, with a long and proud history of providing thought leadership in Africa.

Without doubts, Russia and African leaders will draw a comprehensive working map based on the discussions in St. Petersburg. The summit achievements will help to consolidate the aspirations of the African continent and African nations as fully as possible, and chart ways for materializing common priorities of Russia and the African countries within the framework of the African Union’s Agenda 2063 and the 2030 Agenda for Sustainable Development.

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World

Kenya Records $55.1bn Mobile Money Transactions in 11 Months

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uhuru kenyatta

By Adedapo Adesanya

Kenya has continued to maintain its position as Africa’s most remarkable mobile money market as the use of the service hit a historic high in 2021 after users transacted 6.24 trillion shillings (equivalent to $55.1 billion) on phones between January and November in 2021.

This indicated a 20 per cent increase from the previous year, surpassing the $45.9 billion transacted in the entire 2020, the Central Bank of Kenya (CBK) said in a new data released on Monday.

The surge in transactions came despite the government removing COVID-19 subsidies at the start of 2021.

The Kenyan government at the onset of the pandemic in the nation in March 2020 made all mobile money transactions worth $8.83 and below free as well as bank and mobile transactions.

This boosted usage and saw eight million subscribers join the service as cashless transactions increased, according to the CBK.

Upon removal of the subsidies, usage of the service was expected to decline or slow down but the opposite has happened, according to the East African country’s top lender.

It was observed that the highest ever mobile money transaction in a month was recorded in November at $5.5 billion as the number of agents hit a high of 299,053 and subscriptions at 67 million, said the CBK.

Kenya is regarded as the frontier of mobile money, starting the service as early as 2007 and this has transformed the everyday lives of most Kenyans, disrupting the traditional banking system and capturing the previously unbanked market and driving financial exclusion.

With ease brought about by the service, it allows for deposits and withdrawals of cash, bank account transfers, the payment of bills from electricity to school fees, loan and savings transactions, and the receipt of salaries.

A large proportion of the population is employed in cities, sending money home to families in rural areas. As a result, mobile money agents in cities mostly receive deposits of cash, whilst agents in rural areas mostly pay out withdrawals.

The reliability of the system rests heavily on active liquidity management; rural agents have an efficient system of replenishing their cash resources once these have been swapped out for mobile money via customer withdrawals.

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Kenya Slashes Power Costs of Consumers by 15%

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Power Costs

By Adedapo Adesanya 

Kenya has announced a 15 per cent reduction in power costs, handing relief to thousands of homes and industries burdened by the high cost of living and production.

The East African country’s Ministry of Energy in a statement released in the capital Nairobi said the reduction takes effect immediately and would cover the entire 2022 period.

“The tariff reduction is a fulfilment of a commitment made by President Uhuru Kenyatta to the nation, that the first tranche of reduction, 15 per cent, will be reflected in the bills covering the end of the year in 2021,” said the ministry.

The government institution observed that the reduction will boost livelihoods and economic growth by reducing the cost of living, putting more money in Kenyans’ pockets and reducing the cost of doing business.

The ministry said it is working to see the second 15 per cent reduction is affected in the first quarter of the year, bringing the total cut to 30 per cent.

The 30 per cent cut will see consumer costs drop from an average of 24 shillings (about 0.21 U.S. dollars) per kilowatt-hour to 16 shillings (about 0.14 US Dollars).

Kenya’s demand for electricity has sustained an upward trend, growing at an average rate of 4.5 per cent year-on-year driven by rising economic activities.

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