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eNCA
15-05-2025
- Business
- eNCA
Session comes as South Africa leads G20
JOHANNESBURG - Team South Africa took centre stage at the Africa CEO Forum, which wrapped up in Ivory Coast this week. A high-level panel discussion focused on unlocking the potential of the African Continental Free Trade Area. It also included the country's economic priorities, investment outlook, and broader role on the continent. The session comes at a critical time, as South Africa leads the G20.
Zawya
05-05-2025
- Business
- Zawya
The vital role of trade agreements in driving South Africa's economic growth
Trade agreements are one of the essential pillars supporting South Africa's economic strategy, shaping market access, investment flows, and international competitiveness. While global discourse on trade has recently focused on negotiations involving the United States, Canada, Mexico, and China, to mention a few, South Africa needs to look closer to home and examine its own trade agreements to capitalise on emerging opportunities and mitigate potential risks. With the African Continental Free Trade Area (AfCFTA), the Southern African Customs Union (SACU), and the Africa Growth and Opportunity Act (AGOA) shaping the country's trade landscape, understanding these agreements and how to leverage them are the keys to navigating an increasingly complex global economy. The importance of trade agreements Trade agreements streamline the exchange of goods and services between countries, reducing tariffs and barriers that otherwise hinder economic growth. Historically based on barter systems, modern agreements involve structured and equitable exchanges. South Africa's participation in agreements such as AGOA and SACU allows businesses to access international markets under preferential conditions, driving growth, enhancing economic development, and supporting job creation. AGOA, for example, gives South African exporters duty-free access to the US market for certain goods, particularly benefiting sectors like agriculture, automotive manufacturing and mining. However, AGOA's non-reciprocal nature means South Africa is vulnerable to US policy shifts. Recent diplomatic tensions - highlighted by the US decision to expel South Africa's ambassador - illustrate how quickly trade dynamics can change, potentially affecting market access. Losing AGOA preferences would subject exports to higher US tariffs, significantly hindering South Africa's competitiveness against countries with lower costs and more efficient supply chains. Challenges in navigating trade agreements Trade agreements also pose several other challenges, particularly regarding compliance with international regulations. For South African businesses, especially SMEs, navigating complex legal and administrative requirements can be resource-intensive. Meeting high standards for exports, for example the stringent sanitary and phytosanitary measures in agriculture, requires significant investment in quality control and documentation. Another significant issue is the infrastructural and logistical barriers hampering trade efficiency. South Africa's ports and border posts, notably Beitbridge Border Post, remain congested and inefficient, negatively impacting trade with neighbouring countries. Delays in customs processes and high transportation costs also limit the competitiveness of South African exports, disproportionately affecting smaller businesses looking to enter export markets. Expanding trade beyond traditional partners Against this backdrop, it is imperative for South Africa to actively strengthen trade relationships within Africa. The AfCFTA offers a historic opportunity to create a unified African market, reducing intra-African trade barriers and promoting economic integration. Recently, South Africa began preferential trade under AfCFTA, enabling duty-free or reduced-duty exports to 12 African countries. However, inadequate infrastructure, regulatory disparities, and non-tariff barriers still hinder growth. To leverage AfCFTA fully, South Africa – and indeed all other African countries - must invest in logistics and border efficiency. Modernising customs procedures, reducing red tape and enhancing transportation networks will facilitate smoother trade flows. Addressing regulatory bottlenecks will also help SMEs participate more fully in regional trade, promoting economic inclusivity. Beyond Africa, engagement with BRICS nations offers additional trade opportunities. While China remains a major partner, other BRICS markets hold untapped potential for South African exporters, particularly in minerals, manufacturing and agriculture. However, non-tariff barriers, such as Brazil's stringent medical equipment import regulations, must be addressed to fully realise these opportunities. Policy considerations and future trade strategies For South Africa to remain competitive globally, a strategic policy approach is essential. Recent EU investments totalling €4.7bn in green energy and vaccine production reflect growing opportunities to diversify trade and attract foreign investment. But it is imperative that we build on this positive momentum. There are some areas where government is doing that – for instance its recent decision to invest R1 billion into local electric vehicle (EV) production, thereby demonstrating alignment with global sustainability trends and hopefully enhancing South Africa's competitive position over time. However, there is still much work to be done and, unfortunately, the recent budget demonstrated that there is not much money to fund that work. In fact, little has been said or done of late to signal serious government intent of any sort to boost economic growth through trade facilitation. Still hope for a future built on strategic trade growth Despite the challenges, though, South Africa still has a unique opportunity to reposition itself as a leader in African trade and beyond. By embracing digital customs processes, strengthening regional trade networks and leveraging public-private partnerships alongside private sector investment, the country can create a more agile and resilient trade environment – one that evolves from merely reacting to global trade shifts to proactively leveraging the power of trade agreements to help shape its own economic destiny and that of the African continent.
Zawya
30-04-2025
- Business
- Zawya
How AfCFTA can insulate Africa against trade wars?
In the current era of unpredictable global trade, marked by escalating tariffs and trade wars – particularly between the US and China – Africa is at a crucial juncture. These major economic powers are implementing policies that create uncertainty in international markets, forcing countries to re-evaluate their trade strategies. Amidst this uncertainty, the African Continental Free Trade Area (AfCFTA) emerges as a potential solution, aiming to counter external pressures and bolster trade within Africa. However, it is essential to approach this potential game-changer with cautious optimism, considering the historical and structural challenges that persist. A significant challenge lies in the stark contrast in intra-regional trade. Africa's intra-continental trade stands at a meager 14 percent, significantly lower than the European Union's 70 percent, ASEAN's 57 percent, and NAFTA's 44 percent. This highlights a historical inefficiency that has hindered the continent's economies. Progress has been slow even within established regional frameworks like the East African Community (EAC). Despite having a Common Customs Union for 24 years, intra-EAC trade remains at a mere 18 percent. Additionally, external players such as China, India, and the UAE dominate markets in Africa, collectively controlling over 60 percent of trade in the EAC, often without preferential trade agreements. This situation not only reveals systemic inefficiencies but also reflects a concerning reality: Africa's exports lack diversification, consisting mainly of primary agricultural commodities and minerals like gold, copper, and uranium, among many others. The absence of technological infrastructure and expertise prevents value addition, hindering countries from fully benefiting from their natural resources. The challenges extend beyond macroeconomic concerns. Logistics and trade facilitation pose significant hurdles. Read: AfCFTA gains momentum as 48 African countries ratify agreementCurrently, a container shipped from Mombasa, Kenya, to Apapa Port in Nigeria or Tema Port in Ghana or Port Matadi in DRC often takes a detour to European ports, resulting in a journey of up to five months. In contrast, transporting a container of basic commodities from Europe to the same markets in West and central Africa takes only 14 days. These inefficiencies severely impact trade fluidity across the continent. The AfCFTA's Guided Trade Initiative in 2022, where goods took 72 days to traverse this route, further exemplifies the logistical bottlenecks that need to be addressed. Therefore, it's not surprising that the Eastern Africa grade A black tea has to be blended with Grade C/D tea in Europe and sold in West and Central Africa as European tea. The basic consumer goods in some of these markets are from Europe and Asia. To overcome these challenges, innovative solutions that go beyond traditional trade agreements are necessary. Inadequate connectivity, a historical challenge, can be addressed through strategic initiatives. One crucial step would be establishing intra-African shipping lines to promote direct maritime connectivity. In the past, air travel within Africa was often routed through international hubs in Europe or Asia. However, the emergence of airlines like Kenya Airways and Ethiopian Airlines has streamlined air travel across the continent, demonstrating the potential of homegrown solutions. Similar efforts are now required in the shipping sector, by constructing ships and developing fleets dedicated to intra-African routes. Indeed, the Kenya Navy has built MV Uhuru and MV Uhuru II that are plying Lake Victoria waters. It is not inconceivable to have an MV Africa operating between East African Coast and West Africa Coast via the Cape. This shift towards intra-Africa shipping represents a fundamental change in the approach to continental trade. By enhancing routes and reducing reliance on external shipping pathways, African nations can strengthen their economies and improve the accessibility of goods across borders. Read: The AU is in dire need of new directionThis restructuring aligns with the AfCFTA's goals and empowers member states to leverage the collective bargaining power and resources within the continent. While the AfCFTA is a crucial step towards intra-African economic integration, it should not be viewed as the sole solution to the complex challenges faced by the continent. Its potential should not overshadow the realities of trade inefficiencies and structural barriers that continue to impede progress. As Africa navigates the turbulent global trade landscape, a cautiously optimistic approach is necessary. By investing in systemic changes, particularly a robust intra-Africa shipping infrastructure, Africa can position itself not merely as a participant in global trade but as a leader driving its economic renaissance. Furthermore, it is important to recognise that the success of the AfCFTA will depend on the political will and commitment of African leaders. Addressing issues such as corruption, protectionism, and non-tariff barriers will be crucial for creating a conducive environment for intra-African trade. Additionally, investing in human capital development and technological advancement will be essential for enhancing Africa's competitiveness in the global market. The AfCFTA presents a unique opportunity for Africa to take control of its economic destiny. However, realising its full potential will require a concerted effort from all stakeholders, including governments, businesses, and civil society. © Copyright 2022 Nation Media Group. All Rights Reserved. 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Zawya
24-03-2025
- Business
- Zawya
UAE says supply-chain accessibility is key to economic growth during G20 Trade and Investment working group
HE Juma Al Kait: 'We believe that trade is the main driver of economic development, positively impacting investment, industrialization, job creation and innovation, and it is incumbent on us to support a global trading system that is inclusive and accessible'. Abu Dhabi – The UAE has reaffirmed its commitment to supporting an open, rules-based trading system that promotes sustainable economic development, employment, industrialization, and shared prosperity during a meeting of the G20 Trade and Investment Working Group. Participating in the session as a specially invited guest of South Africa, who holds the G20 presidency for 2025, the UAE delegation also expressed its support for the integration of developing economies into global supply chains, the importance of achieving a just green transition and the ongoing reform of the World Trade Organization (WTO) as a means of upholding a free, fair, and inclusive multilateral trading system. The UAE delegation was headed by His Excellency Juma Al Kait, Assistant Undersecretary for International Trade Affairs at the Ministry of Economy, and included representatives of the Ministry of the Economy and the Ministry of Investment. In his remarks to the working group, HE Juma Al Kait said the UAE trade agenda is closely aligned with the priorities of South Africa's presidency, in particular the structural transformation of the African continent and the development of African Continental Free Trade Area. The UAE, he said, has now concluded Comprehensive Economic Partnership Agreements with five African nations – Kenya, Central African Republic, Congo-Brazzaville, Morocco and Mauritius – and has opened discussions with many more to expand the benefits of free trade and boost investment in key sectors. His Excellency Al Kait also underlined the UAE's investment into regional value chains, citing the UAE's Africa Economic Corridor Strategy, which aims to increase trade by supporting the development of new logistics hubs across Sub-Saharan Africa, and the contribution of Abu Dhabi Ports and DP World to the development of integrated logistics solutions for African businesses. This is in addition to the UAE's support for green industrialization, which is another core focus of South Africa's G20 presidency. His Excellency noted the UAE's significant investments in renewable energy ventures, with commitments of more than US$16.8 billion across 70 countries, the majority of them in the developing world. In the final session, the UAE highlighted the importance of ensuring the WTO is able to fulfil its mandate as the custodian of the global trading system, especially in its ability to address economic asymmetries. He noted the unprecedented progress made on the areas of agriculture and fisheries at the 13th Ministerial Conference (MC13) of the WTO, which was held in Abu Dhabi in February, 2024, and expressed hope that consensus could be found at MC14 in Cameroon next year. His Excellency Juma Al Kait said the Working Group is an important opportunity to build consensus among the global trading community and make the case for open, rules-based trade: 'The United Arab Emirates believes that trade is the main driver of sustainable economic development, positively impacting investment, industrialization, job creation and innovation. It is incumbent on us to ensure the global trading system is inclusive and accessible – especially as we confront a rapidly evolving trading landscape. The G20's trade priorities for 2025 are fully aligned with our own foreign trade agenda, and the Ministry of Economy and the Ministry of Investment will continue to actively contribute to this year's TIWG sessions to ensure the benefits of trade are shared equally and equitably.' The Trade and Investment Working Group, which was held virtually between March 18-20, was the first to be convened under South Africa's presidency of the G20. There will be three further Working Group meetings before the Ministerial Meeting on October 10 in Gqeberha, South Africa. The G20 Presential Meeting will take place in Johannesburg in November. -Ends-
