Businesses in Africa are preparing for the inauguration of the 1.2 billion people market, despite challenges on tariff concessions, rules of origin, and trade in services.
The African Continental Free Trade Area (AfCFTA), which brings together all the African countries with a combined gross domestic product of $3 trillion, had initially been scheduled to be launched on July 1. The implementation was postponed for six months due to the global Covid-19 pandemic that led to lockdowns and restricted movement.
The 13th Extra-Ordinary Session of the Assembly of the African Union (AU), which was held on December 5, under the chairmanship of President Cyril Ramaphosa of South Africa, stressed the urgent need to operationalise trading under AfCFTA to break the dominance of South Africa, Egypt, and Nigeria that controls 50 per cent of the African market.
However, while African traders are eager to start exploring new markets, full implementation of the planned agreement is facing teething problems, including non-completion of discussions on tariff concessions, rules of origin, and schedules of commitments in trade in services.
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In addition, Eritrea has not signed the continental trade agreement, while 20 countries including Tanzania, Burundi, and South Sudan have signed but not ratified it.
Some of the other hindrances to the effective implementation of AfCFTA, according to the Kenya Association of Manufacturers, include overlapping membership to regional trade blocs, underdeveloped transportation infrastructure, unfamiliar or different customs and trade procedures, and weak value chains.
Tanzanian senior trade officer in the Ministry of Trade, Ombeni Mwasha said the country has delayed the ratification of the agreement because the pact had to undergo the “laid down” formal procedure of confirmation, which coincided with the October general-election.
In Kenya, the government has announced that it is doing all the necessary internal preparations to exploit trade opportunities, including training businesses on how to trade in AfCFTA.
It is estimated that the average tariff on intra-African trade stands at around 6.1 per cent, higher than that imposed on exports outside the continent.
Under the AfCFTA, liberalisation of trade is being carried out through regional trading blocs which are the East African Community (EAC), Common Market for Eastern and Southern Africa (Comesa), Southern African Development Community (SADC), and the Economic Community of West African States (Ecowas) which run separate Customs unions.
Each bloc is required to prepare its tariff offers, rules of origin, and schedules of commitments in trade and services and submit them to the AfCFTA Secretariat.
However, in East Africa, negotiations on tariff concessions, trade in services and rules of origin for items such as motor vehicles, clothing and textile, sugar and edible oils are yet to be concluded.
In addition, there are conflicts amongst EAC partner states on the modalities of preparing schedules of tariff offers for goods meant for liberalisation.
Also, Ecowas is yet to submit its liberalisation instruments and must do so before the EAC can trade with the region.
Kenya, IMF in Talks to Renew $1.5bn Facility
The International Monetary Fund (IMF) has confirmed its talks with Kenyan authorities to renew a 165 billion shilling (about $1.5bn) standby loan facility.
The IMF Director of Communications Department, Gerry Rice, disclosed that the lender was in Kenya in late 2020, reached an agreement in many areas on implementation of the fiscal plan.
“We are in discussions with the Kenyan authorities on the possibility of a programme to support the next phase of their response to the crisis,’’ Rice said in a statement.
“We had a mission there toward the end of last year, and reached an agreement in many areas so that technical work is continuing,’’ he said.
“We hope that will lead to something being presented to our board for consideration in early 2021.’’
The IMF withdrew access to the standby facility in June 2018 after Kenya failed to meet programme objectives such as reducing the budget deficit and modifying interest-rate controls.
An IMF team and the Kenyan authorities had agreed that a reduction in the fiscal deficit to 7.2 per cent of GDP in 2017/18 and further to 5.7 per cent of GDP in 2018/19, down from 8.8 per cent in 2016/17, would be appropriate.
Rice said Kenya continues to face an unprecedented external shock that will severely challenge the economy’s underlying health and the policy path forward.
“We are recommending a pause in fiscal adjustment this fiscal year to accommodate increased health spending and support for the economy during this shock,’’ he said.
“We are also recommending continued supportive monetary policy response, as has been the case in Kenya.’
“As we move beyond the crisis, it will be critical that the authorities resume the pursuit of fiscal sustainability, fiscal adjustment, especially now that the shock has increased the debt vulnerabilities,’’ Rice said.
“We would be talking in those terms about a reduction of the fiscal deficit through a well-balanced policy mix.’’
Kenya’s Treasury said the lack of IMF’s loan facility has badly affected the country’s foreign exchange defence mechanism over the past two years, resulting in a weaker shilling against major international currencies.
Kenya to Conduct Survey on Diaspora Remittances
The first-ever survey of its kind, will be conducted in February and March, and will be spearheading by the the Central Bank of Kenya (CBK).
Kenya will next month commission a survey on remittances from its citizens in the diaspora as it seeks to increase the inflows’ support in development and economic growth.
The first-ever survey of its kind will be conducted in February and March and will be spearheaded by the Central Bank of Kenya (CBK).
Kenya’s apex bank will work closely with the Kenya National Bureau of Statistics (KNBS), the Ministry of Foreign Affairs (MFA) and other stakeholders.
“The Survey on remittances aims at collecting valuable information on remittance inflows to Kenya to help guide policy, with the objective of boosting the role of remittances in supporting the economy and livelihoods,” CBK said in a statement on Friday.
The valuable information includes; the efficiency and cost of alternative remittance channels, challenges encountered in remitting cash or non-cash transfers, the availability and flow of information to Kenyans in the diaspora about investment opportunities in Kenya and the usage of remittances received.
Remittances are an important source of foreign exchange and they play a pivotal role in socio-economic development of recipient countries.
Despite the devastation by Covid-19 in the source countries, remittance inflows were strongly buoyant in Kenya in 2020.
The CBK notes that remittances rose to a record high of $3,094 million (Sh340.5 billion) in 2020, from $2,796 million (Sh307.7 billion) the previous year, an increase of 10.7 per cent.
In just of December 2020 alone, remittances reached a historical peak of $299 million (Sh32.9 billion).
“This remarkable growth of remittances has been supported by financial innovations that provided Kenyans in the diaspora more convenient channels for their transactions,” governor Patrick Njoroge has said, on behalf of the CBK.
The Survey on remittances will be an online program conducted in two parts—the first phase will focus on the sources of remittances (remitters and the source countries), while the second phase will target the households that receive remittances.
TheCBK said a link with more information concerning the survey will be circulated widely through various communication channels and will also be available on CBK’s website
North America and Europe make up over 70 per cent of where the diaspora inflows to Kenya are from.
Kenya’s National Treasury has for a while been eager to tap the diaspora market to support economic growth through investments in the country, with a keen focus on the capital market in rising infrastructure development funds.
NIN Deadline: Telecom Providers Deny Blocking SIM Cards
January 19 is the set deadline for subscribers to link their NIN with their SIM cards while subscribers without NIN have until February 9 to do so.
Mobile network operators in Nigeria including telecoms giants MTN and Airtel have dismissed all claims by subscribers that their SIM cards are being blocked before the deadline set for the linkage with the National Identity Number (NIN)
The Federal Government through the Nigerian Communication Commission had earlier ordered network providers to deactivate telephone lines of subscribers who failed to link their phones to their National Identity Number.
January 19 is the set deadline for subscribers to link their National Identity Number with their SIM cards while subscribers without NIN have until February 9 to do so.
But some subscribers have complained about the inability to use their lines, suggesting that telcos have started blocking their SIM cards before the deadlines announced by the government.
As a result of this, large crowds resurfaced at the centres of the National Identity Management Commission nationwide after the Yuletide break with many NIN applicants disregarding previous appointment dates given to them by NIMC.
Regarding the large crowds that resurfaced at NIMC offices after the Yuletide break, NIMC Regional Coordinator, Funmi Opesanwo, said, “A lot of applicants complained that their SIM (cards) have been blocked and that is why we are experiencing these large numbers. We are trying to manage the situation.”
When asked about the alleged disconnection of subscriber lines, The Senior Manager, External Relations, MTN Nigeria, Funso Aina, said the operator has not started blocking SIM cards not yet linked with NIN.
“It is not true that we have started blocking SIM cards not linked with National Identity Number,” Aina said.
While commenting on the same issue, Vice President, Corporate Communications & CSR, Airtel Nigeria, Emeka Oparah, also said no subscriber has been blocked yet.
“Airtel Nigeria is committed to ensuring total compliance with the directives of the Federal Government and the Nigerian Communications Commission on linking NIN with phone numbers. We have not blocked any customer and we will not block any customer at this point in line with the directives.” Oparah said.
Meanwhile, as a result of complaints that followed the large crowds that were seen at its state offices in Lagos and Abuja, NIMC has released a list of over 50 National Identity Number enrolment centres in both cities.
NIMC Spokesman Kayode Adegoke, said the decentralisation will help in decongesting the large gatherings at the state offices in Lagos and Abuja as well as make the NIN registration process more seamless for applicants.
The Presidential Task Force on COVID-19 had expressed displeasure at the large crowds at NIMC offices all over the country while calling on the Minister of Communications and Digital Economy, Isa Pantami, to shut down some NIMC offices over non-adherence to COVID-19 protocols.
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