Africa’s free trade area: A pipe dream or silver bullet?
01 • 06 • 2021
By Dianna Games
In May 2021, the bridge across the Zambezi River linking Botswana and Zambia was opened by the presidents of the two countries. The construction of the bridge, which replaces the longstanding, slow ferry service across the river, means trucks on regional routes can now cross the river in a few hours, or less, rather than the previous three days to a week. It also means they can avoid using the biggest crossing between the ports and factories of South Africa and the rest of Southern Africa – Beit Bridge, which is also one of the most congested borders in Africa. A one-stop border post at the bridge will allow easier thoroughfare.
This project embodies the benefits that good infrastructure and joined-up bureaucracy offer regional trade, both of them generally in short supply. More than 250 trucks a day should be able to cross the Zambezi instead of the handful that were able to cross before, bringing down costs, increasing the security of cargo and providing an alternative route for trade to the sea for inland markets.
It is not without potential pitfalls. One is the congestion that is likely to develop at Martin’s Drift border post, currently an alternative to the main border post at Gaborone into Botswana, as demand increases. And sections of the roads along this main trade route, an integral part of the North South Corridor, are in urgent need of repair, for example several hundred kilometres of a two-lane highway through Botswana to Kazungula, with eroded shoulders, deep potholes and livestock roaming the unfenced verges.
Travelling by road across Africa can be a sobering experience, characterised by delays, inefficiency and overzealous bureaucracy. There are a range of literal and figurative potholes that are major constraints to trade. Even as trucks battle with bad roads and congested border posts, they also need to navigate a host of other issues such as roadblocks designed mostly to extort money from drivers. Transport costs make Africa one of the least competitive regions for exports and trade.
The continent’s import dependence and colonial trade patterns are reflected in traffic movements – trucks laden with minerals and other raw materials heading for the sea, returning either empty or loaded with imports.
This is the reality that faces Africa as it unrolls its flagship project, the African Continental Free Trade Area (AfCFTA), which started trading under the agreement in January 2021. The initiative brings together a potential market of more than a billion people and has a lofty ambition of increasing intra-African trade from under 20% currently to more than 30% in just a few years by attracting investment into manufacturing, agriculture and other sectors and building regional value chains.
Intra-African trade is well below that of other regions such as Europe (68%), and Asia (59%) despite years of trade facilitation, the existence of a raft of free trade areas and customs unions and high growth in many economies.
According to UNCTAD, trade within Africa is of a better quality than its trade with the rest of the world. The former has higher manufacturing (46.3%), and medium- and high-technology content (27.1%) as well as more product diversity than the latter. By extension, therefore, the free trade area can help African countries transform by expanding domestic productive capacity, enabling them to move up the value chain and diversify local and export production.
There potential loss of $4.1 billion in tariff revenues for national governments is expected to be offset by increased employment and better use of domestic resources to increase production of new goods and services, among other benefits. In any case, tariff revenue losses are relatively contained for most African countries, given low levels of trade among themselves.
That is the theory. However, current realities are likely to counter the expectations that the AfCFTA is some kind of silver bullet that will transform Africa, sweeping away decades of embedded dysfunction and challenges. The spirit of free trade is well represented at public forums across Africa. But policies and actions at a national level tend to paint a picture that is characterised by a failure of leaders to implement the agreements they sign up to once the fanfare has died down.
Undoubtedly, the AfCFTA has enjoyed significant political commitment to date and there are rafts of trade bureaucrats hammering out the details behind the scenes. But it is not starting from scratch. The continent is amply covered by eight officially recognised regional economic communities (RECs) and many of the technical issues have already been dealt with in existing free trade areas. COVID-19 may have ushered in many new problems for countries to tackle, but it has also provided an inflexion point for policymakers to decide whether it will be business as usual once the pandemic abates, or whether more effort will be applied to making economies more self-sufficient and resilient.
The AfCFTA is not an event, but a long, slow and complex process that will take years to gain traction, given the scale of challenges on the ground that may undermine its progress and potential. But it has undoubtedly created a framework for change and given the possibility of a better continent new momentum. As the Secretary General of the AfCFTA Secretariat based in Ghana, South Africa’s Wamkele Mene, says, “I don’t want anybody to be under the illusion that this is going to be easy. It’s going to be difficult. But we’ve got to do it.”
This article is an excerpt from a Brenthurst Foundation report titled The African Continental Free Trade Area: A Pipe Dream or Silver Bullet?
Africa’s first On-Demand Expertise Platform launches in South Africa
02 • 08 • 2021
The Homecoming Revolution Group have launched a new platform called INSIGHTS BY EXPERTS.
Built as a B2B ecommerce model, the product allows companies and investors to book instant one-on-one video chats with a curated community of top African professionals across a range of countries, industries and disciplines.
5 Trends within Africa’s Non-Profit sector
30 • 04 • 2021
With the economy making a slow come-back amidst the pandemic, there is one sector which is seems to be making a healthy recovery, the Non-Profit sector.
1. Increased Investment
Comments Faye Tessendorf, MD of Homecoming Revolution, “We have seen a surge of hiring across our NPO clients due to a clear increase in international impact investment.”
2. Hybrid Talent
At Homecoming Revolution we always look for talent with a strong sense of purpose, but besides that, we’re seeing a strong demand for professionals who have a combination of both corporate and NPO experience. Comments Bronwyn Timm, Strategy & Partnerships Lead at Africa Resource Centre, “At ARC there is very specific culture required to be able to shift from the private sector to the NPO world. You need to be a “hybrid” candidate where both best in class strategy and delivery is married with a deep desire to make a difference and drive a fit for purpose strategy” Continues Tessendorf, “The NPO space is competing against the tier 1 consulting firms for talent. Gone are the days where it was seen as charity work to be involved in the non-profit space. These organisations are now focussed on hiring the best talent out there to deliver on some of the world’s most important projects and we are able to attract the best with competitive salaries.
3. Health & Education
Core NPO areas include Health and Education with a digital drive focus. Technology innovation being developed in the private sector is quickly being applied in the non-profit sector too.
4. Donor Participation
Continues Tessendorf, “We’re seeing an increase in direct donor involvement with a desire to really understand the on-the-ground impact.” This helps donors to understand the different nuances of rolling out projects in different African countries.
Another trend seems to be multiple NPO’s joining forces to combine funding on larger projects. It’s not always about re-inventing the wheel, but getting more power to make the wheel go faster.
Cape Town vaccine manufacturer to make Covid-19 Pfizer jabs
26 • 07 • 2021
Cape Town – The Biovac Institute is aiming to start production of the mRNA Covid-19 vaccine developed by Pfizer and BioNTech in the second half of next year, its chief executive officer said on Wednesday.
Morena Makhoana said the Cape Town-based firm would ramp up production of the COVID-19 vaccine before reaching output of 100 million doses a year around early 2023.
Biovac will become the first company in Africa to produce the Pfizer BioNTech vaccine.
In a joint statement the pharmaceutical groups said: “Biovac will perform manufacturing and distribution activities within Pfizer’s and BioNTech’s global Covid-19 vaccine supply chain and manufacturing network, which will now span three continents and include more than 20 manufacturing facilities. To facilitate Biovac’s involvement in the process, technical transfer, on-site development and equipment installation activities will begin immediately.”
The statement also confirmed that “Pfizer and BioNTech expect that Biovac’s Cape Town facility will be incorporated into the vaccine supply chain by the end of 2021. Biovac will obtain drug substance from facilities in Europe, and manufacturing of finished doses will commence in 2022.
’’At full operational capacity, the annual production will exceed 100 million finished doses annually. All doses will exclusively be distributed within the 55 member states that make up the African Union.”
The latest statistics show that more than 5.5 million South Africans have been partially vaccinated against Covid-19 and as of Tuesday, nearly 2 million adults were fully vaccinated.
Chairman and chief executive of Pfizer Albert Bourla said: “Our latest collaboration with Biovac is a shining example of the tireless work being done, in this instance to benefit Africa. We will continue to explore and pursue opportunities to bring new partners into our supply chain network, including in Latin America, to further accelerate access of Covid-19 vaccines.” – additional reporting Reuters
Picture: Armand Hough/African News Agency(ANA)
By Nathan Adams
This article first appeared on IOL.co.za
Global Education Coalition explores the Digital Learning turn in Africa
26 • 05 • 2021
UNESCO’s paper, A snapshot of educational challenges and opportunities for recovery in Africa, highlights the challenges and responses to COVID-19 based on sub-regional data, including the shift to remote learning.
Regarding the transition to distance learning and the digital divide in Africa, the paper highlights that the COVID-19 crisis and the sudden closure of schools resulted in rapid national shifts to replace in-person teaching with various forms of ICT-based, remote and hybrid education. Data from UIS, 2021, show that both at the peak of the pandemic and in September 2020, online learning was provided as an effective solution for globally all the countries (84-86%). However, Sub-Saharan Africa and, to a lesser extent, Northern Africa lacked sufficient devices and internet connection to sustain online and other remote forms of teaching and learning for all students. A year into the pandemic has illustrated that African countries must create and support an enabling environment for the expansion of digital learning infrastructure to leave no one behind.
The report concludes that in the past two decades, Africa has made important progress in social development, economic growth and education, all of which has been jeopardized by the global pandemic. Poverty and inequality might be exacerbated in the near future unless bold action is taken to promote equity and inclusion in Africa, including leveraging innovation and creativity potential such as education initiatives designed and implemented during the crisis.
As education is the greatest equalizer in society and best placed to help curb disparities, the following short and long-term actions are identified for education to play a key role in the continent’s recovery:
Short and medium term priorities:
- Bring learners back to school
- Organize catch-up programmes
- Empower teachers (digital technology should be incorporated into their teaching including pedagogies for blended learning)
- Support education demand in particular from disadvantaged population
- Implement upskilling and reskilling programmes for workers at risk of losing jobs
- Protect public expenditure on education
- Address long-standing structural challenges including access, equity and quality of education
- Mobilise more domestic resources to education
- Invest in infrastructure (including digital equipment and connectivity)
- Engage digital transformation of education and leverage technologies for advancing quality and equity of education and lifelong learning opportunities for all
This article first appeared on www.unesco.org
Final frontier for renewable energy market investment
30 • 06 • 2021
According to a US Power Africa fact sheet, the Democratic Republic of Congo (DRC), a country of over 85 million people, has a “national electricity access rate of just 9%, with 1% in rural areas and 19% in urban areas”.
This shows the enormity of the supply gap and the large renewable energy investment opportunities in the country—and the DRC is but one example across the vast African continent, writes Akinwole Omoboriowo II, Chairman of Board of Directors, Genesis Energy.
Consequently, the huge amount of capital project construction expenditure needed to meet the extant electricity supply gap across Africa makes for substantially compelling positive investment opportunities in the power space.
This gap, coupled with the urgent need to meet the deadline of UN Sustainable Development Goals (SDGs) by 2030 – particularly SDG7 – means that the opportunity for the power sector to light up Africa is consequentially enormous, to say the least.
SDG7 seeks to ensure access to affordable, reliable, sustainable and modern energy for all by 2030. Most African countries recognise that gas-operated power plants alone are unable to meet the urgent power demand. As such, they are tilting their policy thrusts towards encouraging investments in renewable energy solutions including hydro, solar, wind, geothermal and nuclear.
Profiling mini-hydro as a renewable energy investment option
Mini-hydro plants, for example, are a valuable part of Africa’s energy mix and can be developed with minimal or no negative social and environmental impacts. Mini-hydro solutions can be set up in virtually all parts of Africa. Their sustainability for stand-alone utilisation in the rural areas can be justified by noting that many viable mini-hydro scale plants are actually run-of-river schemes, which are based on water wheels that require minimal civil works.
Genesis Energy (GENESIS) is primed to deploy multiple units of modular mini-hydropower plants across several qualifying communities in Africa, in partnership with highly capable international companies, including Voith-Germany. It is GENESIS’s ambition that these multiple off-grid small hydro investments will act as needed catalysts in stimulating improved socio-economic activities within the rural communities and beyond.
The attractiveness of innovative mini-hydro modular run-of-river solutions, besides the speed of deployment on fast track basis with little or no civil construction, includes the financing solution of potential funding to be provided by several multilateral developmental institutions and national credit agencies of up to 85% of the equipment cost; single-digit fixed interest rate and the long term repayment period of up to 20 years.
These renewable energy solutions can be deployed to existing electricity grids as necessary ‘complimentors’ or limited to an end-user community. There is also the option of the location through minigrids, which ensures that communities not competitively served by national grids can still be served with modern, competitively priced and clean power in a sustainable way.
This article first appeared on esi-africa.com
Agritech is the next frontier in growing Africa food security
26 • 07 • 2021
Agritech is a small but fast-growing segment of the start-up universe that’s aiming to improve or disrupt the global food and agriculture industry.
Over the past five years, funding in agritech start-ups across the African continent has been rising consistently, according to data from Disrupt Africa, with hot spots emerging in Kenya and South Africa.
While African agritechs raised more than Sh6.4 billion in 2020, up 23.7 percent from the previous year, they still represent 8.6 percent of all start-ups across the continent. Kenya has led the way mainly because of deals in the last two years, including the $85 million raised by GRO Intelligence, and other big deals involving Twiga Foods and Apollo Agriculture.
These investments in African agritech are quite timely as agriculture and food security in Africa have been under the pressure of many challenges such as low productivity, lack of knowledge and exposure to new farming techniques, and limited financial support.
Add to that, Africa’s weather is unpredictable, its population is exploding, and farming practices deplete the farm soil and exacerbate deforestation and water scarcity. Farmers often lack technical expertise and young people are migrating from rural areas and into cities. Furthermore, African farmers will need to increase their productivity to provide food and economic growth to support its growing population.
Poor digital literacy and unwavering respect for traditional ways of working still persist. Africa remains the most food-insecure region in the world and a net importer of food. Finally, we are also in the very early days of understanding what funding models work. And we can’t forget the existential threat of the climate change.
These challenges are prompting investments in newer technologies. Lately, there has been an increased use of various technologies in agriculture in Africa, such as Internet of Things (IoT), open source software, cloud computing, artificial Intelligence, drones, and big data analytics.
Many tech start-ups have developed solutions targeting various aspects of agriculture, including finance, supply chain, retailing, and even delivering information on crops and weeds. These solutions are accessible to farmers through front-end devices such as smartphones and tablets, or even SMS.
Some agritech start-ups in Africa have come up with solutions that have led to an increase in productivity of the farms. Drones are a breakthrough technology, helping farmers oversee their crops, and manage farms. They capture photos of crops, soil or weeds, giving insights to farmers, saving time and energy, while also helping them find potential issues which could impact the productivity.
Other technologies enable smart farm management through the use of networked sensors providing details of the crops, soil, equipment or livestock.
There are also new financial services for farmers, covering credit, farm inputs, insurance and market access through machine learning, remote sensing, and mobile technology.
There is a need for wide adoption of these tools to benefit Africa.
Efayomi Carr, Principal, Flourish Ventures.
This article first appeared on businessdailyafrica.com
$80billion to be invested into African private sector
30• 06 • 2021
Earlier this month, the G7 DFIs, the IFC, the private sector arm of the African Development Bank, EBRD and the European Investment Bank announced that they are committed to investing $80 billion in the private sector over the next 5 years to support sustainable economic recovery and growth in Africa.
The announcement is a welcome boost to support the long-term development objectives of African economies that have been negatively impacted by the pandemic.
It is the first time the G7 DFIs have come together to make a collective partnership commitment to the African continent.
Comments Angel Jones, CEO of Homecoming Revolution, “It’s encouraging to see such a large collaboration of investors focussing on Africa’s prosperity. This investment will boost economic growth and create jobs. We look forward to matching top talent to these important opportunities.”
Prioritised investments will include vaccine manufacturing, Covid-19 response, climate mitigation, and gender equity on the African continent.
The G7 DFI group consists of CDC, Proparco (France), JICA and JBIC (Japan), DFC (US), FinDev Canada (Canada), DEG (Germany) and CDP (Italy). This commitment is also supported by the IFC, the African Development Bank, the European Bank for Reconstruction and Development and the European Investment Bank.
Healthcare Tech Firms on Rise in Africa, Spurred by Covid-19
By Tope Alake
18 • 05 • 2021
Healthcare-focused technology companies are springing up across sub-Saharan Africa after the coronavirus pandemic highlighted gaps in the continent’s medical-supplies chain, according to a new report funded by the Bill & Melinda Gates Foundation.
More than 60 new and existing private firms are now distributing health products to consumers and hospitals via technology across Nigeria, Ghana, Kenya and Uganda, Salient Advisory, a health-care consulting firm, said in the report. The Covid-19 outbreak has also encouraged new entrants in telemedicine, or long-distance patient treatment, it said.
“Startups across the continent are developing innovative, commercial models to transform health-product distribution for consumers and providers alike,” the report said.
The pandemic has highlighted long-existing weaknesses in African health systems, while the imminent need to distribute and administer vaccines across vast territories will only make the problem more apparent. The continent has been relatively little affected by the virus based on official statistics, but testing and reporting is patchy in many countries and anecdotal evidence suggests there have been regular surges.
The startups are being joined by major e-commerce platforms such as Jumia Technologies AG in offering over-the-counter health products, and Nigeria-based Konga plans to launch its health-care distribution subsidiary in the second half of 2021, the report said.
Some health startups are now serving as many rural customers as in urban areas, with services offered including patient engagement via chatbots and text messaging, inventory management, stock financing and counterfeit drug detection. About 53% of the 61 companies surveyed indicated an interest in the distribution of Covid-19 vaccines through last-mile delivery and administration support.
This article first appeared on Bloomberg.com
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