Wednesday, November 29, 2023
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Desiderio Consultants Ltd. is a think tank and a network of independent professional international development consultants established to promote and influence customs & trade-related policies in African nations to achieve trade facilitation reforms aimed at improving international and regional trade
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Private sector as an important source of growth in Somalia

At present, little is known about private sector organizations in Somalia, despite a mapping exercise conducted by the Center for International Private Enterprise (CIPE) in 2022, identified 38 of such organizations, including business associations, chambers of commerce and several types of cooperatives active in different sectors of the economy. The study shows that despite most of these organizations have basic governance structures in place (e.g., board of directors, constitution or bylaws, a general assembly, etc.), many of them are still not registered with the competent authorities. The registration process also lacks of clarity, and multiple registrations are required, both at federal and State-level, which create complexity. Moreover, a single register of all private sector organizations seems to be lacking in the country.


Foreign earnings restrictions in Ethiopia to be eased, but doubts remain on compliance of regulation to the AfCFTA Protocol on Investment

In force since 6 January 2022, a Directive issued from the National Bank of Ethiopia (NBE) requires all exporters of goods and services in the country to transfer 70 percent of their foreign currency earnings to the NBE and 10 percent to their respective commercial banks. The measure, aimed at countering the perennial shortage of foreign currency in the country, allows exporters to access to only 20 percent of the earnings generated by their sales abroad, with the rest being transferred to the banking system that will convert the relevant amount in local currency. Today, the NBE has announced the adoption of a new Directive that relaxes this requirement, allowing local exporters to retain up to 40 percent of their foreign exchange proceeds. This measure is supposed to relaunch exports, allowing Ethiopian traders to use a higher share of their foreign earnings for buying the inputs they need from outside the country in order to feed their manufacturing processes or to pay the services they need from abroad.


AfCFTA able to spur extra-continental investment, but what about intra-continental ones?

In October 2022 a study from the Kiel Institute argued that the AfCFTA offers an opportunity also to third countries for expanding their trade and investments in Africa. The study noted that already the EU is conducting studies on how to improve its connectivity with Africa by identifying a series of Strategic Corridors in the continent where to concentrate funding, so to facilitate its trade links with the continent. At the same time, the study warned that a condition which is necessary for foreign exporters to benefit from the AfCFTA is the reduction of the current level of Non-tariff Barriers, that are amongst the highest in the world, as described in the latest UNCTAD "Key Statistics and Trends in Trade Policy” report. In fact, removing such barriers would mean that also exporters from Europe and third countries will be able to move their products from one African country to another with less hindrances, and therefore at a lower cost. The special assistant to the US President, during a press conference in Washington on 31 July, raised also the need to harmonise investment regulations between African countries as a condition for expanding investments of US companies to Africa.


AfCFTA updates and latest developments

The African Center for Trade, Integration and Development (ENDA-CACID), an African think-tank based in Dakar, Senegal, has made available on its website the report of the former president of Niger Issoufou Mahamadou, designated in 2018 as the “AfCFTA Champion”,  on the Implementation of the African Continental Free Trade Area (AfCFTA). The report was presented on 16 July 2023 to the Fifth (5th) Biannual Coordination Meeting of the African Union and Regional Economic Communities held in Nairobi, Kenya. It gives an update on the status of implementation of the AfCFTA and its future challenges, which are described as follows.


New protectionist policies shield Kenyan economy from concurrence from abroad

Periods of crisis are generally conducive to the return of protectionist policies, a temptation that in Africa has always traditionally been high. The government of Kenya is reported to have banned on Saturday 29 July international firms from engaging in clearing and forwarding business related to provision of land transport services in the country. The reason seems to be the fact that logistics firms in Kenya cannot compete with international shipping lines that operate land-based logistics services. According to the government, already 50 nations have enacted laws restricting foreign access to domestic transportation. But the question now is, will this measure increase logistics costs in an economy that has already experienced a sharp surge in the last years, especially after the increase of fuel prices? Logistics costs are typically incorporated by importers in the prices of goods to consumers, so the risk is that this restriction will further inflate prices in the country is high.


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