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Afreximbank, AAAM Sign MoU on Africa Auto Industry Financing

Under the terms of the MoU, Afreximbank and AAAM will work together to enhance the emergence of regional value chains with a focus on value-added manufacturing created through partnerships between global original equipment manufacturers, suppliers, and local partners.

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The African Export-Import Bank and the African Association of Automotive Manufacturers have signed a memorandum of understanding on the financing and promotion of the automotive industry in Africa.

Afreximbank President, Prof. Benedict Oramah, notes the strategic partnership with AAAM will facilitate the implementation of the bank’s automotive programme, which aims to catalyze the development of the automotive industry in Africa as the continent commences trade under the African Continental Free Trade Area (AfCFTA).

Under the terms of the MoU, Afreximbank and AAAM will work together to enhance the emergence of regional value chains in Africa with a focus on value-added manufacturing created through partnerships between global original equipment manufacturers, suppliers, and local partners. 

Both organizations plan to undertake studies to map potential regional automotive value chains on the African continent in regional economic clusters, in order to enable the manufacture of automotive components for supply to hub assemblers.

The Afreximbank and AAAM will also collaborate to provide financing to industry players along the automotive value chain in order to support the emergence of the African automotive industry.

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Potential interventions will include lines of credit, direct financing, project financing, supply-chain financing, guarantees, equity financing, among others in Africa.

The MoU also provides for the partners to support, in conjunction with the African Union Commission and the AfCFTA Secretariat, the development of coherent national, regional, and continental automotive policies and strategies on the continent. 

According to the AAAM: with an integrated market under the AfCFTA, abundant and cheap labor, natural resource wealth, and a growing middle class, African countries are increasingly turning their attention to support the emergence of their automotive industries.

Therefore, the alliance between Afreximbank and AAAM will be an opportunity to fuel the aspirations of African countries towards re-focusing their economies on industrialization and export manufacturing and fostering the emergence of regional value chains.

The African Association of Automotive Manufacturers CEO David Coffey has also commended the move saying the signing of the MoU with Afreximbank is an exciting milestone for the development of the automotive industry in Africa.

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AfCFTA

Zambia Tenders AfCFTA Ratification to AU Commission

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Zambia has submitted the instruments of ratification of the African Continental Free Trade Area (AfCFTA) Agreement to the AU Commission.

The southern African nation deposited its instrument of ratification to the AU Commission through its envoy, making it the 36th AU member to fully accede to the agreement, the 55-member pan African bloc disclosed.

With Zambia’s ratification, only 18 members are left to comply with the requirement.

The UN Economic Commission for Africa (UNECA), which helps AU members in crafting their own national AfCFTA strategies, said on Monday that Zambia’s ratification comes as the country finalises its national AfCFTA strategy, which will guide its implementation of the agreement.

Trading under the continental free trade pact started officially on January 1 2021.

The UNECA, through its African Trade Policy Centre (ATPC), has been working with the AU Commission and member states to deepen Africa’s trade integration and effectively implement the agreement through policy advocacy and national strategy development.

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AfCFTA

AU Member States Adopt Digital COVID-19 Certificates

The new digital application will assist travelers to comply with Covid-19 travel protocols and share vital information to end double testing across the continent.

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From the month of January, all member states of the African Union (AU) will start using digital Covid-19 certificates as one way of eliminating travel restrictions that were occasioned by the coronavirus pandemic.

The new digital Covid-19 certificates will assist travellers to comply with Covid-19 travel protocols and share vital information to end double testing across the continent.

The application is from Econet Wireless and PanaBios and has been certified by AU and the Africa Centres for Disease Control and Prevention (Africa CDC).

The application will also share information concerning the latest travel restrictions and entry requirements which are applicable to the entire stretch of a passengers’ journey across the African continent.

This new innovation is coming at a time when the African Union is working closely with the African Continental Free Trade Area (AfCFTA) secretariat to reduce the number of non-trade barriers in the wake of implementation of African free trade.

The AU has already sent a notice to all its member states on the digital Covid-19 certificates for the simplified health-related immigration processing for travellers and port officials, to ensure that the African continent continues to control and possibly reduce the spread of the Covid-19 pandemic.

The application powers the Trusted Travel Portal, which contains information about the latest travel restrictions and entry requirements. This is a database of authorised laboratories and vaccination compliance material.

Several African countries are now experiencing a second wave of the COVID-19 pandemic with a surge in cases reported daily. This has led to countries placing strict movement restriction within the countries.

Some African countries have begun assessing different COVID-19 vaccines available so as to commence procurement.

South Africa tops the continents chart of COVID-19 cases with a total of 1.37m positive reported cases so far. Of this number, 1.16m have recovered and sadly, 38,854 people have so far died of COVID-19 related cases.

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AfCFTA Agreement Kicks Off Despite Legal Hurdles and Rigid Systems

According to the World Customs Organisation (WCO), inconsistent and obsolete laws and regulations, and resistance to change and lack of transparency in Customs administration operations in most African countries are major challenges to ensuring that the free trade takes off and continues uninterrupted in the operational phase starting this month.

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The new year saw the commencement of the Africa Continental Free Trade Area and its waiting to see how it will pan out.

But according to the World Customs Organisation (WCO), inconsistent and obsolete laws and regulations, and resistance to change and lack of transparency in Customs administration operations in most African countries are major challenges to ensuring that the free trade takes off and continues uninterrupted in the operational phase starting this month.

Some countries, unable to establish clearly the regulatory basis for their modernisation efforts and amending their existing laws or adopting new legal frameworks, may derail efficiency of goods and services in the continent.

In its strategic document entitled “Customs in the 21st Century,” WCO says that Customs modernisation programmes must be part and parcel of all countries to ensure AfCFTA succeeds.

Part of the document reads “Resistance to change can be a major stumbling block and new practices can expose corrupt activities. Consequently, change can be seen as an attack on officials and some countries have laws and regulations which are out-of-date, confusing, and sometimes contradictory.”

Lack of co-operation and connectedness among government agencies has also been cited as a hindrance to intra-Africa trade thus, WCO recommends agencies involved in border management to step in and play their part to boost inter-agency co-operation.

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The CEO of Shippers Council for Eastern Africa and chair of Mombasa Port Charter Gilbert Lagat, says businesses suffer both direct border-related costs, such as expenses related to supplying information and documents to relevant authorities, and indirect costs, such as those arising from procedural delays, lost business opportunities and lack of predictability in regulations.

Recent surveys that calculated these costs showed that they ranged between two and 15 percent of the value of traded goods in developed countries and up to 30 to 42 per cent in production costs in developing countries such as Kenya.

Despite recent reforms, trade-related procedures still remain lengthy, cumbersome and costly an aspect which has negatively impacted intra-region trade.

Implementation of policies and laws by countries within East African Community has failed to unlock borders causing delays such as during the Covid-19 pandemic where trucks carrying essential goods queued for days awaiting clearance.

In Kenya, the rationale for implementing the Single Window System as a result of such weaknesses and seeks to reduce the number of players handling goods before clearance from 27 days to at five to eradicate duty duplication.

The success of the system will also come as a result of government strict enforcement of the 24-hour economy in port operations, shippers paying duties, and employing global best practices.

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