AfCFTA timeline starts to count in July

That will be decided during the forthcoming African Union meeting slated to take place in the next three months, according to the officials who gathered in Arusha on Thursday 25th April, 2019.

The proposed African Continental Free Trade Area is not simply a `Free Trade Agreement` it is about establishing a unified continental market with 1.2 billion potential customers and where the private sector is the major engine to make it happen.

This was the tone from the discussions of the meeting held in Arusha about how the East African Private Sector including Small and Medium Enterprises (SMEs) could benefit from the African Continental Free Trading Area (AfCFTA)

The one-day meeting, organized jointly by the East African Business Council (EABC) and the United Nations Economic Commission for Africa (ECA), convened close to 40 key players from the region`s private sector. The office for Eastern Africa of ECA estimates large potential gains from the AfCFTA, including an increase in intra-African exports of Eastern Africa by nearly Tshs.2.3 trillion ($1 billion) and the job creation of 0.5 to 1.9 million.

`Together African economies have a collective GDP of $2.5 trillion, making it the eighth largest economy in the world. That makes the continent much more attractive to investment, both from within and from outside the continent, ` said Andrew Mold, acting Director of ECA in Eastern Africa. `This should encourage business people to take advantage of AfCFTA and make the investments necessary to sustain economic growth and create employment.`

Nick Nesbitt, Chairman of EABC, emphasized the importance of the continent having a clear vision to put an end to the fragmentation of the internal market. `I really applaud everybody who has been involved in creating the AfCFTA because their vision is the one of Pan-Africanism. It is something our founding fathers aspired for a long time. Our thanks to ECA for being at forefront of this conversation and pushing the agenda forward so that the continent becomes a single economic trading bloc, ` he said.

Kenneth Bagamuhunda, Director General of Customs and Trade at the East African Community Secretariat, cited the experience of Regional Economic Communities as the building blocks for the AfCFTA. `The AfCFTA should build on what has already been achieved in regional negotiations like the Tripartite Free Trade Area, as well as within our respective regional blocks,` he said. Bagamuhunda also highlighted governments need to set a conducive environment for the successful implementation of AfCFTA.

The AfCFTA was signed in March 2018, at a historic meeting of the African Union in Kigali. 52 of 55 African Union member states have so far signed the AfCFTA, 22 countries that have ratified the agreement, which was the minimum number for it to enter into force. It seeks to create the largest trade zone in the world, increase intra-African trade by 52% by the year 2022 and remove tariffs on 90% of goods.

A summary of AfCFTA’s progress

  • 52 countries have signed the AfCFTA agreement
  • 22 countries have ratified the agreement as of April 2,2019
  • 15 countries have deposited their instruments of AfCFTA ratification with the AU
  • 7 countries including Gambia have received parliamentary approval for ratification but are yet to deposit instruments with AU.
  • Eritrea, Nigeria and Benin are yet to sign the AfCFTA agreement
  • The AfCFTA Agreement will enter into force; 30 days after the required number of ratifications have been deposited with the AU.

Also read:Africa’s move to push for cheaper, faster trade

EAC to exploit the $1.2 billion continental market after AfCFTA ratification

Members of East Africa`s private sector including small and medium size enterprises are preparing to exploit the over Tshs.2.7 trillion ($1.2 billion) continental market after endorsement of African Continental Free Trade Area (AfCTA).

At their meeting in Arusha on Thursday 25th April,2019, members of East Africa Business Council (EABC) who teamed up with United Nations Economic Commission for Africa (ECA) said they foresee large potential gains from the AfCFTA, including an increase in intra-African exports of Eastern Africa by nearly Tshs.2.3 trillion ($1 billion) and job creation of 0.5 to 1.9 million

`Together African economies have a collective gross domestic product (GDP) of $2.5 trillion, making it the 8th largest economy in the world. That makes the continent much more attractive to investment, both from within and from outside the continent, ` said Andrew Mold, the acting Director of ECA in Eastern Africa.`This should encourage business people to take advantage of AfCFTA and make the investments necessary to sustain economic growth and create employment, ` Mold added.

EABC Chairman, Nick Nesbitt emphasized the importance of the continent having a clear vision to put an end to the fragmentation of the internal market. `I really applaud everybody who has been involved in creating the AfCFTA because their vision is the one of pan-Africanism,` Nesbitt said. `It is something our founding fathers aspired to. Our thanks to ECA for being at forefront of this conversation and pushing the agenda forward so that the continent becomes a single economic trading bloc, ` he added.

Speaking at the same gathering, Director General of Customs and Trade at the East African Community Secretariat, Kenneth Bagamuhunda cited the experience of regional economic communities as the building blocks for the AfCFTA.

`The AfCFTA should build on what has already been achieved in regional negotiations like the tripartite free trade area, as well as within our respective regional blocks, Bagamuhunda said. He also highlighted governments need to set a conducive environment for the successful implementation of AfCFTA.

The AfCFTA was signed in March 2018, at a historic meeting of the African Union in Kigali. 52 of 55 African Union member states have so far signed the AfCFTA (Eritrea, Nigeria and Benin are yet to sign the agreement) , 22 countries have ratified the agreement, which was the minimum number required for it to enter into force. Gambia`s parliament approved the AfCFTA on Tuesday 23rd April,2019, becoming the 22nd nation to do so, and effectively meeting the minimum threshold for the agreement to come into force.

The AfCFTA seeks to create the largest trade zone in the world, increase intra-African trade by 52% by the year 2022 and remove tariffs on 90% of goods.

Also read: Africa’s move to push for cheaper, faster trade

Controversial cable car to boost tourism on Mount Kilimanjaro

Overlooking the sprawling Savannah plains of Tanzania and Kenya, the snow-capped Mount Kilimanjaro rises majestically in splendid isolation to 5,895 metres above the sea level, making it the world’s highest freestanding peak.

Tanzania Deputy Minister for Natural Resources and Tourism Constantine Kanyasu stated the Cable Car facility was part of the government’s latest strategy to woo tourists with over 50 years of age.

Mr. Kanyasu said that they hope that the cable car will allow more ageing tourists to experience the wide variety of nature and wildlife of Mount Kilimanjaro. Instead of the familiar views of snow and ice, he said the cable car would offer a day trip safari with a bird’s eye view, contrary to the eight-day hiking trip.

The initial work for the cable car has just taken off with AVAN Kilimanjaro hiring the Crescent Environment and Management (CEM) Consult Limited to conduct Environmental and Social Impact Assessment (ESIA).

CEM engaged tour operators and other mountain stakeholders in Kilimanjaro and Arusha region where the company has made presentations on the proposed cable car and a lodge projects as part of the ESIA process.

However, key industry players, namely tour operators, guides and porters strongly protested the new facility, saying climbing the magnificent Kilimanjaro Mountain on foot is a lifetime experience that should never be compromised by cable cars.

Mount Kilimanjaro Porters Society (MKPS) opposed the cable car product outright, saying it will deny employment to nearly 250,000 unskilled porters scaling up Mount Kilimanjaro for a wage each year.

The MKPS showed disappointment in decision makers who had overlooked interests of the huge number of unskilled labour force, which solely depends on the mountain to eke out a living, citing the ripple effect on families of the 250,000 unskilled porters.

They also argued that the glittering cable car product will contradict the country’s conservation policy, as it will encourage mass tourism and become a major threat to the ecology of Mount Kilimanjaro. The car is planned to be installed along the Machame route, which doubles as an irreplaceable birds` migratory route, creating worry over electric wires severely affecting the migration of birds.

They further accused authorities of deliberately violating the law of the land by allowing a foreign investor to operate a cable car service on Mount Kilimanjaro. The law provides for exclusivity of Mount Kilimanjaro services to local operators with Section 58(2) of the 2008 Tanzania Tourism Act No 11 clearly stating mountain climbing or trekking registration should be issued to companies fully owned by Tanzanians.

Tour operators are also worried over the cable car harshly affecting revenues in a long run, owing to the service significantly reducing the length of stay from eight to one day. They fear the multiplier effect of the decline to the entrance, camping, rescue and crew fees will also be reflected on the national economy.

Also read: Tanzania: Independence and Tourism

 

No hope for Tanzania’s closed forex shops

The November 2018 closure of forex shops in Dar es Salaam by the government implicated 82 out the 87 forex shops in money laundering among other violations of the law.

So far, over 50 forex shops in the commercial capital have not opened business for weeks after the Bank of Tanzania (BoT) opened an impromptu inspection into their undertakings. Preliminary findings by the regulator found out that some of these businesses were flouting the law, regulations and procedures associated with the money changing business.

The BoT governor, Professor Florens Luoga stated that the ongoing probe has revealed a lot of rot, noting that a final report on the matter will be issued once the exercise is completed. The governor specified that only five of the 87 forex shops in Dar es Salaam were operating within the law and the rest were associated with money laundering.

The governor made the statement at a press conference convened by the Minister of Finance and Planning, Dr. Philip Mpango to brief reporters on the ongoing crackdown of forex shops in Arusha and Dar es Salaam.

The minister stated that the inspection revealed there were a lot of transactions from the formal money system to unlawful system, thus elements of money laundering weakening the local currency and among other actions threatening the national security. The minister further stated that some of the shops were found to spend a lot Tanzanian shillings buying foreign currencies, but few reports were found on how the foreign money left. He also insisted that the inspection was in line with national laws, contrary to complaints from some people that the exercise was against the law and was a violation of the traders` rights.

The minister argued the BoT was following on the matter to ascertain the facts behind various transactions. He also said relevant legal procedures were followed in confiscating various equipment like computers, mobile phones or special information storage machines to help with investigations, and no money confiscated from the shops was nationalized. The minister stated the government has prepared new policies specifying on licence application and operation of forex shops noting that the guidelines will help to create a good business environment and eliminate risks to the entire financial sector.

Speaking on the effects of the inspection, he said the shilling has slightly gained strength rising from Tshs.2450 against the dollar at the onset of the inspections to an average Tshs.2300 currently. At the same time, commercial banks have also increased their daily collection of foreign currencies reaching Tshs.34.5 billion ($15 million) per day. The minister hoped that through the government`s control of the business, commercial banks and other financial institutions in the country would trade more foreign currencies thus increasing their stock. He also dispelled speculations that the government carried out the crackdown because it lacked foreign currency in its coffers.

Also read: The Tanzanian forex business under scrutiny

Tanzania forex business shifted to banks