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New pan-African trade deal could be the “anti-Brexit” and unleash continent’s economic potential

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The African Continental Free Trade Area (AfCFTA), due to launch in January 2021, is likely to be a watershed for African regional and international agri-food trade, a new report has found.

The AfCFTA will be one of the largest free trade areas in the world since the establishment of the World Trade Organization (WTO), covering a market of more than 1.2 billion people and up to US$3 trillion in combined GDP. The agreement also creates the opportunity to increase intra-African trade by more than 50 per cent, adding an estimated US$76 billion in income to the rest of the world.

“Lagging far behind other major regions of the world like the EU in terms of trade between individual countries, the African Union and its member states have made a commitment to foster the links between domestic markets across the continent” said Ousmane Badiane, co-chair of the Malabo Montpellier Panel, which authored the report.

“This new trade deal comes at an opportune time for the continent to support fast-transforming economies and meet a surging domestic demand fueled by a rapidly growing population and urban middle class.”

The trade area comes into force as the Africa population continues to grow, rising from 1.2 billion people to an estimated 2.2 billion by 2050, creating exponential demand. Yet the continent already relies on food and agricultural imports worth approximately US$72 billion  per year, growing by 3.6 percent each year of late.

And in the midst of the COVID-19 pandemic, estimates show that Africa’s trade volumes are projected to decrease by eight per cent for exports and about 16 per cent for imports during 2020.

Agricultural experts at the Malabo Montpellier Panel analyzed the potential opportunities for African national governments and its eight regional economic communities to trade more effectively in this new paradigm, including ways to leverage informal cross-border trade. Informal trade accounts for 30 to 40 per cent of total trade within the Southern African Development Community (SADC), and as much as 86 per cent of Uganda’s official exports.

The Panel’s recommendations include improving information and data on crossborder trade, particularly on informal cross-border trade, for instance data on its scale, quality of products, and patterns of trade flows. This would support simplifying regulations, providing training on food hygiene, enhancing access to finance, and addressing entrepreneurship skills.

“Many of those reliant on cross-border trade for their livelihoods are women, who have been disproportionately affected by restrictions, border closures and curfews enforced due to Covid-19, alongside gender-based discrimination and violence,” said Ishmael Sunga, member of the Malabo Montpellier Panel and Chief Executive Officer of the Southern African Confederation of Agricultural Unions (SACAU).

“Once the AfCFTA is in place, wages for skilled and unskilled women are expected to rise by up to four per cent by 2035, through new employment opportunities across the agriculture value chain.”

The report outlines how to address tariff and nontariff barriers, and how to improve and expand infrastructure, for instance by addressing cumbersome customs procedures, roadblocks, subsidies, and technical barriers such as sanitary and phytosanitary (SPS) rules.

New digital solutions can help, such as introducing radio frequency identification (RFID) or microchipping for tracking livestock, or the digital storage and exchange of safety certificates for easy and quick transmission across countries.

The report also provides examples of how to enhance value chain competitiveness and strengthen crisis preparedness and resilience, with emphasis placed on those food products that are of high value and contribute to improved nutrition at the same time. 

This calls for investments into the design and development of technologies that improve both the quantity and quality of food. Furthermore, the provision of training facilities needs to be enhanced to expand access to opportunities for skill development and innovation capacity along the value chain.

“Rule-based open trade is essential for an efficient and sustainable African food system, and keeps food prices more stable, which is good for producers and consumers” said Joachim von Braun, co-chair of the Malabo Montpellier Panel.

“The next ambition can be a fair and deep trade partnership between the African Union and the European Community.”

Every year, between 10 and 12 million young Africans enter the job market, vying for one of only about 3.1 million jobs created. Although agriculture and informal sectors are already the highest employers on the continent, they are likely to accelerate employment creation as the demand for food across the continent rises.

“As mechanization and digitalization expand across food systems, new entrepreneurship opportunities – beyond the farm – will emerge in the agri-food sector, creating the potential for high-quality, sustainable jobs across Africa,” said Debisi Araba, member of the Malabo Montpellier Panel member and managing director of the African Green Revolution Forum (AGRF).

The Panel drew on the experiences of Africa’s existing regional trading blocs, such as the Common Market for Eastern and Southern Africa (COMESA), Economic Community of West African States (ECOWAS), and the Southern African Development Community (SADC),  including governance systems, institutional policy innovations, and programmatic interventions.

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World Bank Supports Recovery and Resilience of Rwanda’s COVID-19-Affected Businesses

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The World Bank Group today approved $150 million from the International Development Association (IDA)* to help the Government of Rwanda increase access to finance and to support recovery and resilience of businesses affected by the COVID-19 pandemic.

The Access to Finance for Recovery and Resilience (AFIRR) Project also benefits from $25 million in IDA grants, as well as an additional $7.5 million grant from the Global Risk Financing Facility (GRiF), to help enhance business’ access to finance.

This project is an important contribution to the government’s post-COVID Economic Recovery Plan, promoting investment in priority growth sectors, supporting jobs and reinforcing Rwanda’s financial system’s crisis preparedness.” said Rolande Pryce, World Bank Country M anager. “The AFIRR project provides significant resources to help further capitalize the Economic Recovery Fund coupled with enhanced support programs to improve firms’ capacity and remove barriers to access to finance. It provides a suite of instruments that strengthen the existing recovery ecosystem ranging from financial instruments to adjustment mechanisms that include innovative risk mitigation solutions.”

The project will provide financing targeting affected businesses to facilitate refinancing of existing debt obligations, provide working capital, and support investments for business adaptation and growth through the provision of longer-term sources of finance. This will be complemented by risk sharing instruments, including a partial credit guarantee scheme and a bridge loan and insurance facility, to increase access to finance for underserved segments, such as micro, small and medium sized enterprises (MSMEs). In addition, the project will provide targeted technical assistance to firms, participating financial institutions, and government implementing agencies, to address existing constraints for increasing uptake of the Economic Recovery Fund.

Interventions under the project will help businesses to continue to operate and adapt to the post-COVID-19 environment. They will also provide a lifeline to firms in growth-potential sectors that find it difficult to access financing from financial institutions; this will contribute to preserving jobs and mitigating loss of otherwise productive firms that can help drive economic recovery” said Brice Gakombe, World Bank Financial Sector Specialist, and Task Team Leader of the project.

In addition to providing financing, the AFIRR project will bolster the capacity of key government and private sector stakeholders on the technical aspects of the financing and risk-sharing instruments, as well as disaster risk financing principles. As women were hardest hit by the COVID-19 (coronavirus) pandemic, the project focuses on increasing the share of women-inclusive enterprises able to access financing under the liquidity and financing facility and through targeted training to address gender specific constraints for MSMEs as well as improve outreach in underserved segments.

The AFIRR project will be co-financed in the amount of $100 million by the Asian Infrastructure Investment Bank (AIIB), of which Rwanda is a non-regional member. It is AIIB’s first investment in Rwanda.

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Sierra Leone Receives World Bank Support to Strengthen Education Service Delivery

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Sierra Leone will receive $6.85 million in additional financing to support the COVID-19 education response in the country. Funded by the Global Partnership for Education (GPE) under the Free Education Project, the financing will support activities to ensure school safety and strengthen education service delivery including continuous distance education and accelerated learning. It will also support sustaining effective Government operations, planning, and policies during and after the COVID-19 crisis.

“As an alternate board member of the GPE Board, Sierra Leone continues to play a leading role in the Partnership to implement programs that promote accessible quality education for all,” said Hon. David Sengeh, Minister of Basic and Senior Secondary Education for Sierra Leone. “In the COVID-19 era, we need to think outside the box to ensure that widening inequities do not further push our most vulnerable populations backward. That is the focus of this additional financing. Even as the Ebola Viral Disease has been recently recorded in the sub-region, we will be able to use the same interventions for continuous learning should the disease ever return to Sierra Leone.”

The financing, which was approved by the World Bank Board of Executive Director on February 5 and became effective on May 26, 2021, is aligned with the Government’s education priorities and strategies, including those outlined in the COVID-19 Education Emergency Response Plan and the World Bank’s Country Partnership Framework for Sierra Leone, specifically with its emphasis on the importance of investing in human development.

There is an implementation partnership arrangement with an NGO Consortium led by Save the Children, partnering with Handicap International (operating under the name Humanity and Inclusion), Plan International Sierra Leone, Concern Worldwide, Foundation for Rural and Urban Transformation, Focus 1000, and Street Child of Sierra Leone. This partnership will help the Government deliver activities rapidly, focusing more on community engagement, and reaching the most marginalized and deprived groups.

“This additional financing will help the Government to cover the costs associated with expanded activities relating to the COVID-19 response as well as enhancing the impact of the Free Education Project in responding to the challenges in the education sector,” said Gayle Martin, World Bank Country Manager for Sierra Leone. “The funding will also help address commitment toward achieving a more inclusive approach to education, increasing the retention of girls and improving the learning environment for children with disabilities.”

The Free Education Project is financed by a $66 million grant, with $50 million from the World Bank and $16 million from development partners. It will help to address key challenges in the education sector. It will contribute to achieving the Government’s larger strategic objectives in the sector while supporting analytical and advisory services associated with monitoring and evaluation, technical assistance, and research and studies.

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Mozambique: Violence continues in Cabo Delgado, as agencies respond to growing needs

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A woman and her baby who fled their home in northern Mozambique in November 2020 are now living in a camp for displaced people. © UNHCR/Juliana Ghazi

Civilians continue to flee armed conflict and insecurity in northern Mozambique, more than two months after militants attacked the coastal city of Palma, located in Cabo Delgado province, UN agencies reported on Friday. 

The UN refugee agency, UNHCR, reports that some 70,000 people have fled the city since 24 March, bringing overall displacement to nearly 800,000. 

People have been escaping daily for districts further south, or to neighbouring Tanzania. Thousands more are reported to be stranded in areas around Palma, with restricted humanitarian access. 

Shots fired, houses burned 

“Those fleeing have told UNHCR staff that the situation in Palma remains very unstable, with regular gunfire at night and torching of houses”, Spokesperson Babar Baloch said during a briefing in Geneva. 

UNHCR and partners recently assisted people living in dire conditions in remote areas around Palma, distributing relief items to some 10,000 who have been displaced. 

The agency continues to advocate for internally displaced people to receive protection and assistance, and for those seeking safety in Tanzania, to access asylum. 

Forced back into danger 

Mozambican authorities report that many people attempting to cross the river, which marks the border between the two countries, have been forcibly returned.  More than 9,600 have been pushed back since January, with 900 removals occurring over a two-day period this week. 

“UNHCR reiterates its call for those fleeing the conflict to have access to territory and asylum, and, in particular, for the principle of non-refoulement (no forced return) to be respected”, said Mr. Baloch. “Refugees must not be forced back into danger.” 

‘A children’s crisis’ 

The UN Children’s Fund, UNICEF, said needs are enormous in Cabo Delgado, located in a region that has barely recovered from a deadly cyclone in 2019.  

In the wake of the attack in Palma, some 2,000 children have no idea of the whereabouts of their parents, or even if they are alive, agency Spokesperson James Elder told journalists

“What is happening in Cabo Delgado is a children’s crisis – an emergency on top of an emergency – a deadly cocktail from the impacts of climate change, conflict and COVID-19”, he said. 

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