The failure by Comesa-EAC-SADC member states to sign and ratify instruments for the creation of a tripartite free trade area (TFTA) four years after its launch points to countries’ reluctance to open up their markets.
Experts warn that this protectionism will impact the implementation of the African Continental Free Trade Area (AfCFTA).
Launched in 2015, the TFTA was meant to establish a single market for 27 African countries with a combined population of about 700 million people and a GDP in excess of $1.4 trillion.
Paramasimuv Pillay, Mauritius’s acting President, who spoke at the Comesa High Level Business Summit in Nairobi last week, said that intra-African trade has continued to be depressed because of barriers to regional trade.
He blamed partner states “who remain keen on sheltering their internal markets from external influence.”
The share of intra-Comesa trade stands at a paltry seven per cent in spite of the fact that the almost three-decade-old bloc accounts for a huge market of 630 million people.
According to data from the Comesa Secretariat, the value of intra-Comesa exports stood at only $8 billion in 2017 with Egypt, Kenya and Uganda being the top three exporters.
Cumulatively, Africa has only exploited less than 16 per cent of intra-Africa’s trade potential largely due to trade barriers and poor transport and telecommunication connectivity on the continent.
The level of intra-Africa trade compares unfavourably with Europe where it stands at 68 per cent, North America at 37 per cent and Latin America at 20 per cent.
“It is unfortunate that most common products traded within our markets are still raw minerals and traditional commodities with little or no value addition that is undertaken in Africa, notwithstanding the fact that Africa has the largest number of young consumers in the world,” said Kenya’s President Uhuru Kenyatta.
He added that although this is the situation that AfCFTA will be attempting to remedy by facilitating higher product diversification and higher levels of progress in intra-Africa trade, member countries must be committed to opening their borders.
It is estimated that abolishing territorial barriers has the potential to increase intra-Africa trade by 52 per cent by 2022, and facilitate industrialisation and sustainable economic development owing to the fact that AfCFTA creates a substantial market of 1.2 billion people with a combined GDP of $3 trillion.
The Comesa conference whose theme was Powering Regional Integration through Trade” and also attended by Ugandan President Yoweri Museveni and Edgar Lungu of Zambia, aimed to address critical issues that hamper the free movement of goods, services, investments and people across the bloc.
“Our fragmented markets are too small to have meaningful economic impact. We need integration to tackle major bottlenecks that undermine efforts to move Africa out of the poverty trap,” said President Museveni.
Among the issues discussed at the forum were manufacturing competitiveness, digitization and trade facilitation, digital financial services and regional payment systems, standards and quality issues, smart and sustainable cities.
The forum was also used to launch the Comesa Source 21 Business Facilitation Handbook aimed at providing market information and trade information in order to promote cross-border trade.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.