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2024 APRM Mid-Year Outlook shows increasing optimism by the international community in Africa’s economic prospects

Thursday, 15 August 2024 09:31

The 2024 Mid-Year Outlook of the Africa Peer Review Mechanism (APRM) shows that the first half of 2024 was marked by more positive changes in outlooks and rating upgrades of several African countries by the three most important rating agencies in the world: Standard & Poor's (S&P) Moody's and Fitch. The work of these agencies basically consists in expressing an opinion on the ability of States to repay commercial debts contracted with international lenders based on a comprehensive economic analysis of their financial markets. The reason why these ratings are important is that they are used by investors in their investment appraisal process and by borrowers in setting the interest rates to be applied on the money they lend. A poor credit rating means that a loan to a certain State has a higher risk to remain unpaid, which prompts an increase in the interest charged to that nation as a measure aimed at compensating for the substantial risk of lending.

AfCFTA impact study conducted in Senegal is optimistic about the effects of the agreement on the economy

Wednesday, 14 August 2024 15:34

After the yesterday’s post on the KIPPRA analysis of the impact of the African Continental Free Trade Area (AfCFTA) on the Kenyan economy, a new study, this time from the Department of Planning and Economic Studies of the Senegalese Ministry of Trade, makes another analysis of the impact of the agreement on the national economy. This is not the first study conducted by the Senegalese Ministry of Trade on the AfCFTA. Exactly one year ago, a similar one was carried out to identify the products having the highest potential for being exported to other African countries within the context of the AfCFTA, based on the Senegal's comparative advantages in the manufacture of such goods and the countries where they are in higher demand in Africa. In line with the optimistic results of the previous study, the new one estimates that the entry into force of the AfCFTA will lead to a general grow of economic activity and consumption in the country mainly due to a reduction of prices and an increase in production in several sectors of the economy. This will cause an improvement, despite slight, in the well-being of households of about 0.4%.

Study from KIPPRA shows that Kenya will suffer from the AfCFTA implementation

Tuesday, 13 August 2024 15:55

A study conducted by the Kenya Institute for Public Policy Research and Analysis (KIPPRA) in 2023 by using an economic modelling tool which has been published only today, shows that the tariff liberalization programme established by the African Continental Free Trade Agreement (AfCFTA) will lead to a substantial decline in tariff revenue for Kenya, with an average potential loss of KSH 22.53 billion (about 178 million USD), much more of the advantages that the agreement will give to the country. A premise is necessary. Economic modelling tools, even the most rigorous ones, look today like slot machines, where after you put the money in and pull down the lever, the win is never sure (for the simple reason that mathematical formulas cannot encompass all the variables that can determine an economic result, with their infinite combinations). However, the alarm raised by the study is quite is worring. The good news is that Kenyan exports are expected to expand particularly in countries with which it has no trade agreements in place, differently from imports, that will increase marginally, only of about 0.1 per cent.

The African dilemma: protectionisms vs free trade

Monday, 12 August 2024 12:23

The creation of the single African market under the African Continental Free Trade Area (AfCFTA) seems it will not be so smooth and quick as anyone expects. Also after the ratification of the AfCFTA and the commitment to eliminate customs duties and non-tariff barriers in their respective trade exchanges, African countries continue to embark in trade skirmishes. This time the protagonists are Zambia and the Democratic Republic of Congo (DRC). The two countries have entered in trade frictions that ultimately have led to the closure of their common border. These frictions started on 26 June, when the Ministry of Trade in DRC issued two decrees introducing a 12-month ban: one on the import of beers and soft drinks, the second on the import of gray cements and clinkers. The introduction of these measures has been motivated with the need to protect the local industry and encourage the production of these goods in the DRC. But the import ban of beers and soft drinks has provoked the reaction of Zambian authorities, as the country exports considerable quantities of such products to the DRC, and considers them as an important source of forex inflows. As a consequence, a decision was taken on Saturday 10 August to close the border with DRC. At the moment there is no trade among the two countries because of this closure, despite both countries have engaged in urgent talks to reopen the border and restore trade.

Africa must focus on vertical industrialization policies to grow

Saturday, 10 August 2024 12:49

An interesting article published by the Africa Policy Research Institute (APRI) highlights the importance for Africa to promote industrialization through appropriate “vertical” industrialization policies. The Made in China 2025 strategy, one of the most important industrialization policies adopted by the Asian giant to promote the development of a local manufacturing industry, notes that “Since the beginning of industrial civilization … the history of the rise and fall of world powers … has repeatedly proved that without a strong manufacturing industry, there will be no country and no nation”. Accordingly, the document raises the importance to develop an internationally competitive manufacturing industry as the only way for China to enhance its comprehensive national strength, ensure national security, and become a world power.

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News

2024 APRM Mid-Year Outlook shows increasing optimism by the international community in Africa’s economic prospects

AfCFTA impact study conducted in Senegal is optimistic about the effects of the agreement on the economy

Study from KIPPRA shows that Kenya will suffer from the AfCFTA implementation

The African dilemma: protectionisms vs free trade

Africa must focus on vertical industrialization policies to grow

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