EU-Africa Business Forum postponed
In the context of the current pandemic, the 7th EU-Africa Business Forum (EABF) – “Turning today’s challenges into opportunities” – has been postponed. This follows a joint decision by the organisers to also postpone the EU-AU Summit initially planned for 28–29 October 2020. A new date for the Summit has yet to be set. Updated information on the future EU-Africa Business Forum, which takes place back-to-back with the Summit, will be published here.
Finance gap: SME rejection rates rising
Rejection rates for trade finance applications for SMEs in Africa are rising, with bank participation in activities decreasing (Southern Times, 25 September). The continent’s trade finance gap, estimated to be more than US$81 billion, is also growing, finds a new report by the African Development Bank (AfDB) and the African Export-Import Bank (Afreximbank). Conducted over 2011–2019, the report titled “Trade Finance in Africa: Trends Over the Past Decade and Opportunities Ahead” is based on a survey of more than 600 commercial banks across 49 African markets.
The research reveals that over the 8 years leading up to 2019, the average size of the trade finance gap in Africa was estimated to be US$91 billion. It decreased slowly from US$120 billion in 2011 to US$70 billion at the end of 2016. However, it has since increased, with the latest data putting it around US$81 billion. At the same time, participation in trade finance by banks has been decreasing. In 2019, 71% of banks surveyed engaged in trade finance activities, compared with 92% in 2014. The share of SME trade finance applications rejected by banks has increased by 20% from 2013 to 2019.
In 2015–2019, a fifth of all of trade finance transactions in Africa were associated with trade in agricultural goods. Already facing a growing trade finance gap and higher rejection rates for SMEs seeking trade finance, African trade must now navigate the Covid-19 pandemic. The report states that “Increasingly, it is becoming clear that the ongoing Covid-19 pandemic could add to the burden of risks facing African trade and trade finance. The pandemic has already resulted in sharp falls in the prices of most of Africa’s top export commodities.”
AGRA: Africa Agriculture Status Report 2020
AGRA (Alliance for a Green Revolution in Africa) has just published the Africa Agriculture Status Report 2020, with the theme “Feeding Africa’s Cities”. According to AGRA, cities currently provide the largest and most rapidly growing agricultural markets in Africa. Out of total urban food sales of roughly US$200–250 billion per year, over 80% comes from domestic African suppliers. In the coming decades, demographic projections forecast rates of African urbanisation as the highest in the world. Today – and even more so tomorrow – Africa’s rapidly growing cities and food markets offer the largest and fastest-growing market opportunity available to the continent’s 60 million farms. Half of these farms involve young people, contrary to widely held perceptions. AGRA and partners’ core commitment to smallholder agriculture must now focus on urban food markets, to position domestic suppliers as competitive, responsive and safe; to provide the right signals and inputs to those markets; and to continue growing opportunities for young people in the agriculture sector.
Harmonisation of standards across Africa
A report on “Identifying Priority Products and Value Chains for Standards Harmonization in Africa”, jointly published by the African Trade Policy Centre (ATPC) of the United Nations Economic Commission for Africa (ECA), the African Organisation for Standardisation (ARSO) and the African Union Commission (AUC), part of a series of Pan African Quality Infrastructure (PAQI) publications in support of African Continental Free Trade Area (AfCFTA) implementation, was launched during a recent webinar (MarketScreener, 5 October). Speaking at the webinar, David Luke, Coordinator of ATPC, emphasised that the AfCFTA Agreement has the potential to be a game changer for Africa’s industrialisation, but it is now widely understood that the industrialisation and trade potential of the AfCFTA will not be realised without adequate quality infrastructure systems including metrology, standardisation, accreditation, quality management and conformity assessment. Lily Sommer, ATPC Trade Expert, presented the main findings and recommendations of the report, highlighting that AfCFTA offers an opportunity for existing RECs to tap into under-exploited market opportunities in other African countries (outside their current RECs). She noted that the report’s analysis identified significant overlap in priority regional value chains for RECs, indicating an entry point to develop competitive between-REC value chains. Common value chains identified across RECs included agro-processing as well as minerals beneficiation, wood products, iron and steel, cotton and textiles.
The discussions highlighted the need for the continental standards harmonisation process to be underpinned by existing WTO TBT and SPS Agreements as sources of best practice, but with adaptations for Africa’s development needs; continental structures to support the development of African Quality Standards, such as ARSO; existing REC standards harmonisation catalogues, which already provide harmonised standards across countries within the same REC; and value chain priorities that are common across RECs, and which offer potential for strong forward and backward linkages.