By Amelia Kyambadde

The African Continental Free Trade Area (AfCFTA) was adopted during the 30th Ordinary Session of the African Union Heads of State and Government held in Addis Ababa, Ethiopia in January 2018. With membership of fifty five (55) countries, the AfCFTA is the second largest trading arrangement after the World Trade Organisation (WTO) with 164 members. The Pan African Free Trade market will have a total market of 1.3 billion people, including a growing middle class and a total GDP of US$2.255 trillion as of 2017

As you may already be aware, Uganda has been chairing the negotiations process for the African Continental Free Trade Area. I wish to inform you that because of the Trust and Confidence bestowed upon our leadership by the rest of the African Union (AU) Member States and the AU Commission, our tenure of stewardship of this process was unanimously extended till the July 2019 Extra Ordinary Summit that will be held in Niamey, Republic of Niger.

As the Minister of Trade, Industry and Cooperatives, I have steered the Bureau and chaired the negotiating sessions including the African Ministers of Trade (AMOT). The Extra-ordinary Summit in Niamey, Niger scheduled for the second week of July 2019 is expected to flag off the AfCFTA by launching the following Instruments:

Tariff offer concessions portal, Africa trade observatory mechanism, Non-Tariff Barriers identification and reporting mechanism, and Product rules of origin among others.

The AfCFTA framework agreement negotiations will cover Trade in Goods, Trade in Services, Investment, and Trade Related Intellectual Property Rights, Competition Policy the Protocol on the Rules and Procedures on the Settlement of Disputes.

The negotiations will take place in two phases. Phase I which is on-going covers Trade in Goods and Trade in Services, while phase II will cover Investment, Competition and Trade Related Intellectual Property Rights

How is Uganda benefiting from the AfCFTA?

AfCFTA is a broader market for Uganda. Our export performance in general has improved over the last three years, rising from US$2.482 bn 2016 to US$2.901bn in 2017 and US$3,087bn in 2018 – excluding informal trade. Our exports to Africa account for 51% of total exports in 2017 and 2018; and are on a positive trajectory.

The top export destinations for the last three years have been: Kenya, Rwanda, DRC, United Republic of Tanzania, Morocco, Zambia, Ethiopia and South Africa.

With the conclusion of the negotiations of the AfCFTA, will therefore lead to tariffs reduction for a number of our strategic export products to especially African countries such as Coffee, Tea, Tobacco, Cereals, Iron and Steel, Dairy and Dairy products, Sugar and Sugar Confectionary among others.

Reduction of Non-Tariff Barriers (NTBs) and creation of a mechanism for addressing any remaining NTBs is also a key benefit. These frameworks will certainly lead to further growth of our exports, thus economically benefitting our people that are engaged in the production process.

Overall and in line with the National Trade Policy of Uganda, these negotiated markets are expected to provide preferential market access for Ugandan goods, facilitate development of trade related infrastructure for cross-border trade among others.

The initiatives are also expected to provide a predictable trade regime amongst Member/Partner States as well as stimulate industrial development through creation of value chains and facilitate movement of business persons.

Progress on Ratification of AfCFTA

The Agreement establishing the AfCFTA entered into force on 30th May, 2019 following the deposit of the Instruments of Ratification by the 22nd signatory member state – the Republic of the Gambia – with the African Union Commission.

According to the agreed modalities, Member states are to liberalize up to 90 percent of their trade in a period of 5 and 10 years for Non-Least Developed and Least Developed Countries (LDCs) respectively. In this regard, the Ministry, in liaison with the relevant ministries, departments and departments(MDA)s, is in the process of finalising Uganda’s tariff schedule for submission.

Progress on the Tripartite Preferential Market access negotiation

The Tripartite Preferential market combines the EAC, COMESA and SADC, equally my Ministry coordinates Uganda’s engagement in the COMESA-EAC-SACU Tripartite Free Trade Area (TFTA) negotiations. The TFTA was launched on 10th June 2015 by the Summit and is aimed at establishing a single market for the twenty seven (27) African economies drawn from the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern Africa Customs Union (SACU).

The TFTA has a combined population of about 700 million people (57% of Africa’s population), and Gross Domestic Product of over USD 1.4 trillion. The structure of the TFTA is built on three pillars; a) market integration b) infrastructure development, and c) industrial development

On the sidelines of the African Continental Free Trade Area meeting in Addis Ababa Ethiopia (6th of June 2019), the EAC and SACU countries held a Ministerial level meeting to conclude tariff negotiations under the TFTA framework.

Under the Agreement, Uganda together with the other EAC Partner States have been granted market access in to the SACU market of (Botswana, Eswatini, Lesotho, Namibia and South Africa) to up to 87.2 percent product lines on entry into force of the Agreement and under a 5-year tariff phase-down.

The conclusion of SACU-EAC negotiations, therefore, marks a significant step towards realising the benefits of the TFTA for Uganda and the EAC region. The concession by SACU provides the EAC (Uganda) a commercially meaningful market access for their private sectors. The offer provides ground for new and dynamic markets for exports as well as new sources of inputs for domestic production processes. Targeted sectors for export interest for EAC include; edible oil, textile and apparel, tea, coffee, beef, plastic among others

Furthermore, emphasis has also been on the development of regional value chains in a wide range of sectors such as automobiles, textiles and apparel, sugar and confectionery among others, with a view to deepen integration of Uganda’s economy into international markets and value chains.

The writer is the Minister of Trade, Industry and Cooperatives

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By Seán Nolan and Krishna Srinivasan

Earlier this year, Cyclone Idai devastated Mozambique, Malawi, and Zimbabwe by leaving more than 1,000 people dead, thousands more missing, and damages in the billions. These storms were among the recent reminders of how natural disasters can cause severe and catastrophic damage. Natural disasters destroy lives and property and have large and lasting effects on economies by reducing production and increasing debt burdens. They also tend to disproportionately affect the poor, who have a limited ability to cope with the impact.

Although not alone, the small island countries in the Caribbean and Pacific are particularly vulnerable to natural disasters. They have suffered, on average, disaster-related losses of 2 to 3 percent of GDP per year over the past 30 years. Some countries have been hit far harder: when Hurricane Maria ravaged Dominica in 2017, it caused damages estimated at some 220 percent of GDP—more than twice the island’s entire annual production.

As climate change continues to affect both the frequency and severity of natural disasters, how can vulnerable countries do more to prepare and cope with their consequences?

In a new IMF paper, we outline how vulnerable countries can develop comprehensive strategies to build their resilience to disasters, based on a diagnosis of risks and cost-effective responses. Having such a strategy can also help countries attract much-needed support from the international community.

Disaster resilience strategies can draw on existing disaster response plans, supplemented by specialist expertise from development partners, and need to be based on three complementary pillars of building resilience:

Structural resilience. Many vulnerable countries lack disaster-resilient infrastructure covering vital services such as water, sewer, and electricity—even though investment in such infrastructure can have very high returns. A key obstacle is high up-front capital costs: the joint IMF-World Bank Climate Change Policy Assessments for Belize, Seychelles, and Saint Lucia estimated that annual investments of 2 to 3 percent of GDP would be required for a full decade to achieve adequate protection. But high public debt levels constrain many countries from making the needed infrastructure investments. They can still build resilience—think of enforcing strong building codes and zoning rules or improving early warning systems.

Financial resilience. The impact of disasters can be contained, but not eliminated. Planning for emergency financing needs for reconstruction must take place before a disaster strikes. One option is to make provisions in the budget, possibly in the form of a dedicated saving fund to meet disaster needs. Another is using contingency-based financial instruments that provide insurance coverage or relief from debt service payments when a disaster strikes. But regional financial markets are often insufficiently developed to provide these financing options at a reasonable cost, particularly for small countries. For example, while there are regional insurance pools like the Caribbean Catastrophe Risk Insurance Facility and the Pacific Catastrophe Risk Insurance Company, countries have sought limited coverage from them, reflecting the high costs involved. They need help to reduce these costs.

Social resilience. Scaling up structural and financial resilience will take time. This makes it imperative that countries put in place detailed emergency response plans to contain disruptions to critical public services after a disaster strikes—such as water, electricity, medical services, and security—and to limit the impact on the most vulnerable.

Formulating a disaster resilience strategy would help a country identify the areas where it’s most vulnerable and provide a road map to build resilience. The strategy needs to be grounded in strong diagnostics—including risk assessments, project identification, prioritization, and costing—and build on, rather than displace, existing response plans. Once in place, the strategy can help the country catalyze support from the international community.

Support crucial for success

Many small and low-income countries need external support—both expertise and financial assistance—to flesh out and implement a strategy. For this, all stakeholders need to chip in.

Countries themselves should raise additional domestic revenues by re-prioritizing spending and strengthening financial management. This would give incentives to external donors to provide more grants and concessional financing. Climate funds and other climate finance initiatives are also a promising avenue to obtain support, but many countries will need technical support to engage effectively with these funds.

The IMF can help countries by analyzing financing options and recommending ways to build disaster-resilience into medium-term fiscal and macroeconomic frameworks to ensure that public finances remain sustainable.

The IMF also has emergency lending facilities designed to provide speedy assistance to low-income countries hit by disasters—we disbursed more than $100 million to Mozambique less than a month after Cyclone Idai hit. And we also help build capacity within governments through training and technical assistance to help them better manage disaster risks and responses. We can, and will, do more to support countries—who face rising disaster risks as climate change intensifies.

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