'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.
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BBC News
11 minutes ago
- BBC News
After a blown deadline, what next for US-Canada trade?
A self-imposed deadline for a new US-Canada trade deal came and went on Friday. So what happens next for these two deeply entwined neighbours?Canada and the US have been locked in a tariff war for six months and, despite talk of "intense" negotiations in recent weeks, a trade agreement remains elusive. Both President Donald Trump and Prime Minister Mark Carney have poured cold water on the idea they will reach a quick, and tariff-free, deal. And Trump's open criticism of Canada's move to recognise a Palestinian state dashed hopes for a last minute agreement earlier this pessimism marks a shift in tone from as recently as June's G7 meeting, when the two leaders set themselves the summer deadline. 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Almost 90% of Canadian exports to the US are ultimately able to cross the border duty free, if firms file out necessary paperwork, under that agreement."That has given us a buffer, no question about it, that other countries don't have right now," said Prof means Canada is overall paying a much lower tariff rate than many of the deals already inked with the US, like the EU, South Korea and Japan at 15%, or Indonesia and the Philippines at 19%.Ottawa has also brought in some relief programmes for affected industries and has also collected about C$1.5bn more in import duties than in the same period last year, due to the counter tariffs. 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BBC News
13 minutes ago
- BBC News
Trump says he will fire head of BLS as stocks shudder
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Reuters
13 minutes ago
- Reuters
Markets dive after Trump hits more countries with steep tariffs
ZURICH/WASHINGTON, Aug 1 (Reuters) - U.S. President Donald Trump's latest wave of tariffs on exports from dozens of trading partners sent global stock markets tumbling on Friday and countries and companies scrambling to seek ways to strike better deals. As Trump presses ahead with plans to reorder the global economy with the highest tariff rates since the early 1930s, Switzerland, "stunned" by 39% tariffs, sought more talks, as did India, hit with a 25% rate. New tariffs also include a 35% duty on many goods from Canada, 50% for Brazil, 20% for Taiwan, which said its rate was "temporary" and it expected to reach a lower figure. The presidential order, opens new tab listed higher import duty rates of 10% to 41% starting in a week's time for 69 trading partners, taking the U.S. effective tariff rate to about 18%, from 2.3% last year, according to analysts at Capital Economics. U.S. stocks took a hit. By afternoon on Friday, the Dow Jones Industrial Average (.DJI), opens new tab had dropped 1.46% to 43,486.45, the S&P 500 (.SPX), opens new tab 1.8% to 6,225.55 and the Nasdaq Composite (.IXIC), opens new tab 2.42% to 20,610.91. Markets were also reacting to a disappointing jobs report. Data showed U.S. job growth slowed more than expected in July while the prior month's data was revised sharply lower, pointing to a slowdown in the labor market. Global shares stumbled, with Europe's STOXX 600 (.STOXX), opens new tab tumbling 1.89% on the day. Meanwhile, Canadian negotiators said they could walk away from the table if they can't soon reach a deal with the United States. Trump's new tariffs have created yet more uncertainty, with many details unclear. They are set to take effect on Aug 7 at 0401 GMT, a White House official said. Trump administration officials defended the president's approach. "The uncertainty with respect to tariffs ... was critical to getting the leverage that we needed to create the circumstance in which the president could create the trade deals we've seen over the last few weeks, which have been nothing short of monumental," Council of Economic Advisers Chair Stephen Miran said on CNBC. The European Union, which struck a framework deal with Trump on Sunday, is still awaiting more Trump orders to deliver on agreed carve-outs, including on cars and aircraft, EU officials said, saying the latest executive orders did not cover that. Also, it is unclear how the administration intends to define and police the transshipment restrictions, which threaten 40% levies on any exporter deemed to have tried to mask goods from a higher-tariffed originator, such as China, as their own product. Trump's tariff rollout also comes amid evidence they have begun driving up prices. U.S. Commerce Department data released Thursday showed prices for home furnishings and durable household equipment jumped 1.3% in June, the biggest gain since March 2022. Some countries hit with hefty tariffs said they will seek to negotiate with the U.S. in hopes of getting a lower rate. Switzerland said it would push for a "negotiated solution" with the U.S. "It's a massive shock for the export industry and for the whole country. We are really stunned," said Jean-Philippe Kohl, deputy director of Swissmem, representing Switzerland's mechanical and electrical engineering industries. South Africa's Trade Minister Parks Tau said he was seeking "real, practical interventions" to defend jobs and the economy against the 30% U.S. tariff it faces. Southeast Asian countries, however, breathed a sigh of relief after the U.S. tariffs on their exports that were lower than threatened and leveled the playing field with a rate of about 19% across the region's biggest economies. Thailand's finance minister said a reduction from 36% to 19% would help his country's economy. "It helps maintain Thailand's competitiveness on the global stage, boosts investor confidence and opens the door to economic growth, increased income and new opportunities," Pichai Chunhavajira said. Australian products could become more competitive in the U.S. market, helping businesses boost exports, Trade Minister Don Farrell said, after Trump kept the minimum tariff rate of 10% for Australia. But businesses and analysts said the impact of Trump's new trade regime would not be positive for economic growth. "No real winners in trade conflicts," said Thomas Rupf, co-head Singapore and CIO Asia at VP Bank. "Despite some countries securing better terms, the overall impact is negative." "The tariffs hurt the Americans and they hurt us," winemaker Johannes Selbach said in Germany's Moselle Valley, adding jobs and profits on both sides of the Atlantic would be hit. L'Oreal ( opens new tab and a growing number of European fashion and cosmetics companies are exploring use of an obscure, decades-old U.S. customs clause known as the "First Sale" rule as a potential way to soften the impact of the tariffs. The "First Sale" rule allows companies to pay lower duties by applying tariffs to the value of a product as it leaves the factory - much lower than the eventual retail price. Trump has tapped emergency powers, pressured foreign leaders, and pressed ahead with trade policies that sparked a market sell-off when they were first announced in April. His order said some trading partners, "despite having engaged in negotiations, have offered terms that, in my judgment, do not sufficiently address imbalances in our trading relationship or have failed to align sufficiently with the United States on economic and national-security matters." Trump issued a separate order, opens new tab for Canada that raises the rate on Canadian goods subject to fentanyl-related tariffs to 35%, from 25% previously, saying Canada had "failed to cooperate" in curbing illicit narcotics flows into the U.S. The higher tariffs on Canadian goods contrasted sharply with Trump's decision to grant Mexico a 90-day reprieve from higher tariffs of 30% on many goods to allow time to negotiate a broader trade pact. Canadian Prime Minister Mark Carney said he was disappointed by Trump's decision, and vowed to take action to protect Canadian jobs and diversify exports. Flavio Volpe, a member of Carney's Council on Canada-U.S. Relations, told CBC News that the negotiators would stay in Washington for the time being, but if they can't reach an advantageous deal they would "take a pause and walk away. India is in trade talks with the U.S. after Washington imposed a 25% tariff on New Delhi, a move that could impact about $40 billion worth of its exports, an Indian government source with knowledge of the talks told Reuters on Friday.
