
'We are on our own'- Africa looks within to weather growing global tariff turmoil
The African Continental Free Trade Area pact designed to unify all 1.4 billion people under Africa's more than 50 nations into a single market, has been legally ratified by 49 countries and officially launched trading in 2021.
But translation into action has been sluggish, with less than half of member states actively trading under the framework.
The World Bank estimates AfCFTA could increase Africa's intra-continental exports by 81% and proponents point to last year's 12.4% boost in intra-African trade, to $208 billion, according to Afreximbank figures, as early signs of success.
"We've got to accelerate the establishment of our own value chain systems. What we are observing now — the weaponisation of trade policy, investment policy, nationalism — is unprecedented and it has a very negative impact on the multilateral trading system," AfCFTA Secretary-General Wamkele Mene told Reuters.
"The lesson to observe is that we are on our own as a continent."
U.S. President Donald Trump's return to the White House in January put trade relations centre-stage for policymakers worldwide, with his breathless cycle of punitive tariff policies poised to upend decades of globalisation and reshape flows of money and goods.
G20 finance chiefs meeting in Durban this week, under South Africa's presidency, have trade high on the agenda.
But despite the urgent need to boost African continental trade, accelerating it is beset with challenges.
African Union countries have a combined GDP of some $3 trillion - not far off the size of France's economy, a G7 nation.
So far, 24 countries are officially trading under AfCFTA, Mene said, including South Africa and Nigeria.
Implementation has been inconsistent, said Raheema Parker of Oxford Economics, with weak governance undermining overall effectiveness and informal trade adding complexities.
"These barriers are especially pronounced in smaller sub-Saharan economies, which are more vulnerable to external shocks and often lack the administrative and financial capacity," Parker said.
The biggest constraint to intra-Africa trade is an infrastructure deficit, Mene said.
The African Development Bank and Afreximbank collectively invested $65 billion in infrastructure projects since 2020 - barely making a dent in the $100 billion plus estimated annual infrastructure investment shortfall.
Johannesburg-based Standard Bank CEO Bill Blackie warned that "without hardened bridges and faster rail links, AfCFTA will remain a paper promise."
Other barriers include border delays and complex paperwork requirements.
"We need to diminish all the commercial barriers," said Chad's ex-finance minister Abbas Mahamat Tolli.
Currency is also contentious; nearly two-thirds of payments across more than 40 African currencies are clearing through dollar corridors. Afreximbank has called for a shift away from the dollar, citing volatility and high fees.
"Local-currency corridors must become the norm to slash costs and tame volatility," said Afreximbank group chief economist Yemi Kale.
The recently launched Pan-African Payments and Settlement System links 16 central banks and aims to reduce costs.
Leaders say AfCFTA's transformative potential is worth tackling the challenges.
"We have a generational chance to build value chains that keep wealth on the continent, develop competitive industries, and create millions of jobs while shaping global supply chains from a position of strength," Kenyan President William Ruto said earlier this month.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Reuters
26 minutes ago
- Reuters
South Korea seeks to leverage Trump's focus on shipbuilding in tariff talks
SEOUL, July 24 (Reuters) - South Korea and the United States have been discussing a shipbuilding tie-up that could include investments to modernise U.S. shipyards and more help to repair the U.S. naval fleet as Seoul seeks better tariff terms, government and industry sources said. U.S. President Donald Trump, who has made revitalising the ageing U.S. shipbuilding industry a priority to keep up with China, has repeatedly raised the idea of cooperating with South Korea's cutting-edge shipbuilding industry. After investing billions of dollars in shipbuilding capacity, China is the world's biggest shipbuilder. It also has the world's largest maritime fighting force, opens new tab, operating 234 warships to the U.S. Navy's 219, according to the Center for Strategic and International Studies. "South Korea can use shipbuilding as leverage to gain some advantage in tariff negotiations," said Kim Suk Kyoon, a former commissioner of the Korea Coast Guard and an expert on maritime strategy. Pressure on Seoul to reach a deal on import tariffs has increased after Japan struck a trade agreement with the U.S. this week. South Korean officials are in Washington for trade talks, though a high-level meeting due on Friday was postponed over scheduling. South Korea is the world's second-largest shipbuilder and a source with direct knowledge of the talks said any partnership should include South Korean companies investing in the U.S. and helping more in repair and maintenance. South Korea's proposal of a "Korea-U.S. manufacturing renaissance partnership" in areas such as shipbuilding had drawn strong U.S. interest, as Washington called for joint efforts to counter China's shipbuilding growth, Seoul trade officials said, declining to be named as they were not authorised to speak to the media. The U.S. Treasury Department and Trade Representative did not respond to requests for comment on the progress of talks about shipbuilding. South Korea's industry ministry said the U.S. and South Korea were discussing ways to cooperate in manufacturing industries, including shipbuilding, but declined to elaborate. "The most realistic option for South Korea is, I think, to make a deal to fix a certain number of U.S. navy vessels annually or build parts of new ships," said Kim, a visiting researcher at the Korea Institute for Maritime Strategy. Repair of U.S. Navy ships is already happening in South Korea including at Hanwha Ocean's ( opens new tab Geoje shipyard, which has the world's largest dock and a 900-ton "Goliath" crane, according to its website. In July, Hanwha Ocean ( opens new tab secured its third U.S. Navy maintenance contract and parent Hanwha Group has also been expanding in U.S. shipbuilding. It acquired Pennsylvania-based Philly Shipyard for $100 million last year and said this week the shipyard had received an order for a liquefied natural gas carrier to be built together with Hanwha Ocean's Geoje shipyard. The conglomerate recently said it obtained U.S. approval to increase its stake in Australian shipbuilder Austal ( opens new tab that owns a shipyard in Alabama building U.S. Navy ships. Another South Korean shipbuilder, HD Hyundai ( opens new tab, formed a partnership this year with U.S. defence-focused shipbuilder Huntington Ingalls (HII.N), opens new tab, and joined forces with Edison Chouest Offshore to build container ships in the U.S. But, obstacles remain to expanding the relationship. There are difficulties obtaining parts and a lack of local talent at U.S. shipyards, said Woo Jong Hoon, a naval architecture and ocean engineering professor at Seoul National University. Political will would also be needed given the raft of U.S. regulations that protect domestic shipbuilding. A South Korean trade official called for exceptions or changes to the Jones Act, which bars foreign shipyards from building commercial ships to operate in the U.S. The Byrnes-Tollefson Amendment also prohibits the construction of navy vessels in foreign shipyards, but the president retains the authority to waive its provisions for national security. To skirt U.S. regulations, South Korea could look into ideas like building modules to be delivered to U.S. shipyards or designating a South Korean shipyard as a special district so U.S. Navy ships could be built there, Woo said. Trump's introduction to South Korean shipbuilding probably happened nearly three decades ago. The real estate mogul flew in by helicopter to visit the Geoje shipyard in 1998, recounts Lim Moon Kyu, a retired senior executive at the former Daewoo Shipbuilding company who accompanied the VIP guest "with Hollywood looks". Daewoo Shipbuilding was acquired in 2023, becoming Hanwha Ocean. At the top of a 100-metre (328 ft) high crane, Trump was given a birds-eye view of the sprawling shipyard on a southern island. "Clearly, he was impressed, saying 'Wonderful, Wonderful' on top of the crane," said Lim, as he thumbed through photos of the meeting with Trump, who was accompanied by his son Donald Trump Jr. Lim believes the visit left Trump with a lasting positive impression that means he is now open to cooperating with Korean shipbuilders to counter China's growing naval power. "What carrots do we have to give to the U.S.? Nothing but this (shipbuilding) would be immediately possible," said Lim.


The Guardian
26 minutes ago
- The Guardian
UK car manufacturing slumps to lowest (non-Covid) level since 1953
British car and van manufacturing slumped in the first half of the year to its lowest since 1953 outside the Covid pandemic, as Donald Trump's US tariffs caused global industry chaos. UK vehicle manufacturing declined by 12% to 417,200 units in the first six months of the year, figures from the Society of Motor Manufacturers and Traders (SMMT), a lobby group, show. Only 2020 was worse in the past 72 years, when factories were shut during pandemic lockdowns. 'It has been one of the toughest periods for UK automotive,' said Mike Hawes, the SMMT's chief executive. He said he hoped the industry was 'at the nadir' before a recovery. 'The general view is that this is the bottom,' he added. Carmakers have struggled with slower than expected sales while trying to switch manufacturing from petrol and diesel to cleaner electric models, while Stellantis decided to close its Vauxhall van factory in Luton. Trump's tariffs of 25% on all car imports threatened to close off an important export market, particularly for Britain's luxury carmakers such as Bentley, Rolls-Royce and Jaguar Land Rover, the Range Rover maker. Those carmakers paused shipments from April, hoping for lower tariffs. The second half of 2025 is expected to be better for British manufacturers, thanks to the UK's deal with the Trump administration to allow 100,000 exports a year at the lower tariff of 10% from the end of June. Car and van production rose by 7% in June compared with the same month last year. Hawes said the 100,000 quota would allow the industry to 'keep the wolf from the door' by continuing sales at about the same level as 2024, although it would not allow for growth beyond that level without another negotiation with the US's busy trade officials. Some carmakers in Britain – including Japan's Nissan, which is due to start producing its new Leaf electric car in Sunderland, northern England – are also expected to be among the main beneficiaries of the Labour government's decision to subsidise the sale of electric cars by up to £3,750. Those subsidies, worth £650m, will be limited to cars priced at less than £37,000; rules on the carbon dioxide emissions associated with production will mean that imports from outside Europe, including from China and South Korea, will be unlikely to qualify. While Hawes welcomed the decision to support electric car sales, after a three-year gap, he said the subsidies were 'devised, developed by government without consultation with industry'. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Some details of the scheme will not be announced for weeks, leaving carmakers unclear about whether their vehicles will qualify. That confusion has thrown sales plans into disarray, as several companies are unable to say what their products will cost – and sales are expected to drop in the short term as buyers await clarity. The subsidies could also make it harder for excluded carmakers to meet targets on electric car sales, known as the zero-emission vehicle (ZEV) mandate, Hawes said. The difficult conditions for the UK industry have meant that ambitions have had to be scaled back. As recently as 2017 the SMMT had hoped for production levels of 2m UK-made cars a year. The latest forecasts prepared for the lobby group suggest there will be only 755,000 cars made in 2025, down from an expectation of 815,000 in April, before the tariff chaos.


Reuters
an hour ago
- Reuters
EU's von der Leyen says China ties are at 'inflection point' at tense summit
BEIJING, July 24 (Reuters) - European Commission President Ursula von der Leyen called for an "essential" rebalancing of trade ties with China during a tense summit on Thursday with President Xi Jinping, saying ties stood at an "inflection point", according to a pool report. Expectations were low for the summit marking 50 years of diplomatic ties after weeks of escalating tension and wrangling over its format, with the duration abruptly halved to a single day at Beijing's request. Von der Leyen and European Council President Antonio Costa met Xi at the start of an event set to be dominated by thorny issues ranging from trade frictions to the Ukraine war. "As our cooperation has deepened, so have imbalances. We have reached an inflection point," von der Leyen told Xi during the meeting in the Great Hall of the People. She was referring to the EU's trade deficit with China, which ballooned to a historic 305.8 billion euros ($360 billion) last year. "Rebalancing of our bilateral relation is essential ... It is vital for China and Europe to acknowledge our respective concerns and come forward with real solutions." However, Xi urged the EU to "make correct strategic choices" during the meeting, state broadcaster CCTV said, in a veiled criticism of Brussels' hawkish stance on China. "The more severe and complex the international situation, the more China and the EU must strengthen communication, enhance mutual trust and deepen cooperation," Xi told von der Leyen and Costa, it said. "Chinese and European leaders should ... make correct strategic choices that meet the expectations of the people." The weeks before the summit were dominated by tit-for-tat trade disputes and hawkish European rhetoric, such as a July 8 accusation by von der Leyen that China was flooding global markets as a result of its overcapacity and "enabling Russia's war economy". Shortly before the summit, however, von der Leyen struck a more conciliatory tone, describing it as an opportunity to "both advance and rebalance our relationship" in a post on X on Thursday. "I'm convinced there can be a mutually beneficial cooperation," von der Leyen added. The two EU officials are set to meet Chinese Premier Li Qiang later. Both sides are hoping to reach a modest joint statement on climate, currently one of the only bright spots in EU-China cooperation. State news agency Xinhua also appeared to downplay Beijing's rivalry with the 27-member bloc, saying China was a "critical partner" for Europe, with a range of shared interests. "China is a critical partner to Europe, not a systemic rival," it said in a commentary. The two shared interests in trade, climate, and global governance, it said, adding, "These areas of common ground should not be eclipsed by isolated points of friction." The EU defines China as a "partner, competitor and systemic rival", which frames its strategic approach to China policy. At the summit, European leaders are also expected to raise topics such as electric vehicles and Chinese industrial overcapacity. China launched rare earth export controls in April that disrupted supply chains worldwide, leading to temporary stoppages in European automotive production lines the following month. But its exports of rare earth magnets to the EU surged in June by 245% from May, to stand at 1,364 metric tons, though that was still 35% lower than the year-earlier figure, customs data showed. The EU is likely to seal a trade deal with the United States for a broad tariff of 15% on its exports after intense negotiations, avoiding a harsher 30% figure threatened by President Donald Trump. ($1=0.8492 euros)