Intra Africa Trade Trainee Manual PDF

Intra Africa Trade Course Manual New Version 1.0 Copyright © 2023 Intra Africa Trade Table of Contents Module One – Introduction to Intra Africa Trade........................................................ 3 Module Two – The African Continental Free Trade A...

Intra Africa Trade Course Manual New Version 1.0 Copyright © 2023 Intra Africa Trade Table of Contents Module One – Introduction to Intra Africa Trade........................................................ 3 Module Two – The African Continental Free Trade Area in Action.. Error! Bookmark not defined. Module Three – Access Bank and AfCFTA: Real World Impact................................ 9 Module Four - Access Bank Strategies in Overcoming IAT ChallengesError! Bookmark not defined. Module Five - Beyond Banking: Access Bank's Africa expansion…………………... 15 Module Six - Hands -on Learning with Case Studies………………………………….18 Module Seven - The future of Intra Africa Trade and your role……………………….20 Module Eight - Q & A and Wrap Up…………………………………………………….. 2 | Page Intra Africa Trade 1.0 INTRODUCTION TO INTRA AFRICAN TRADE 1.1. WHAT IS INTRA AFRICAN TRADE? Intra Africa trade is the exchange of goods and services among African countries. Basically, it involves trade and economic interactions that occur within the African continent. 1.2. HISTORICAL CONTEXT & EVOLUTION Pre colonisation Africa always had strong and powerful empires. Empires such as the Nubia empire, Ashanti empire, Oyo empire, Bornu empire etc. had trade networks among themselves. These empires traded in gold, iron, kolanut, groundnut, date palm etc. and they were very wealthy. In West Africa for instance there was the Trans Saharan trade which was a highly developed trading route between the Northern Africans and the West Africans. Then came colonisation with its balkanization of the continent and exploitation of both the natural and human resources. 1.2.1. HISTORICAL CONTEXT & EVOLUTION (COLONIAL ERA) The colonial era led to: Economic and social instability in Africa. Gross decline in Intra Africa trade that existed in the pre-colonization era. Africans losing our political independence hence constituted authority had no more power on trading decisions. Processes and procedures of trade in Africa were viewed as archaic or barbaric. Balkanization and hence formal trading partners with Africa were now viewed as enemies. Trading becoming an extra Africa trade. Colonial masters were only interested in getting our resources to their home country. 1.2.2. HISTORICAL CONTEXT & EVOLUTION (POST COLONIAL ERA) Post independence African leaders have been engaged in the process of reversing decline in intra Africa trade that constituted the colonial era and still is today. The current percentage of intra Africa trade is relatively low – 16% of total African trade. Efforts are on to boost this by 52% once the Africa Continental Free Trade Area comes fully on stream. 3 | Page Intra Africa Trade Other efforts by African leaders are: Reduce trade barriers – African leaders are working to reduce tariffs and non-tariff barriers to trade among African nations. Improve infrastructure - Investments in infrastructure, such as transportation networks (roads, railways, ports, and airports), energy and telecommunications, are ongoing to facilitate the movement of goods and services within the continent. Harmonise regulation - Efforts are made to harmonise trade regulations and standards across African countries, making it easier for businesses to engage in cross-border trade. Promote economic diversification - Economic diversification within African countries will lead to a wider range of goods and services being produced and traded within the continent. Capacity building - Initiatives aimed at building the capacity of businesses, especially small and medium-sized enterprises (SMEs), to engage in international trade and take advantage of intra-Africa trade opportunities. HISTORICAL CONTEXT & EVOLUTION (POST COLONIAL ERA) – TRADING BLOCS 4 | Page Intra Africa Trade 1.3. WHY INTRA AFRICA TRADE IS CRUCIAL FOR AFRICAN NATIONS Poverty reduction - Intra-Africa trade can help to reduce poverty by increasing incomes and opportunities and improved standard of living for people living in Africa. Increased economic growth and development - Intra-Africa trade can help to boost economic growth by increasing market size, encouraging competition, and promoting the transfer of technology. Regional integration - Intra-Africa trade can help to promote regional integration by increasing cooperation, collaboration and stronger political ties between African countries which can foster peace and stability within the continent. Reduced reliance on imports - Intra-Africa trade can help to reduce Africa's reliance on imports from outside the continent, making the region more resilient to external shocks. Global shocks like the COVID 19, a stronger intra-Africa trade network can help nations better respond to global crises by reducing reliance on distant suppliers. Improved infrastructure – Intra Africa trade can help to improve infrastructure by increasing demand for transportation and logistics services. To facilitate trade, African nations need to invest in transportation and logistics infrastructure, including roads, railways, ports, and customs facilities. These investments not only enhance trade but also improve connectivity within the continent, benefiting overall development. Increased bargaining power - Intra-Africa trade can help to increase Africa's bargaining power in global trade negotiations especially as the continent moves from commodity export to finished goods export. 1.4. HOW DOES INTRA AFRICA TRADE IMPACT EVERYDAY BUSINESS? Increased access to markets- Intra-Africa trade provides businesses with access to a broader customer base within the continent. Reduced cost- Intra-African trade can help businesses to reduce costs by eliminating or reducing tariffs and other trade barriers. This can make businesses more competitive and profitable. Increased competition - Intra-African trade increases competition between businesses, which can lead to lower prices and higher quality products for consumers. Job creation - Intra-African trade creates jobs by stimulating the growth of new businesses and expanding existing businesses. Improved access to inputs-: Intra-African trade gives businesses access to a wider range of inputs, such as raw materials and 5 | Page Intra Africa Trade machinery. This can help businesses to improve the quality and quantity of their products. Networking, collaboration and ease information sharing - Intra-Africa trade can facilitate networking and collaboration opportunities. Businesses can form partnerships, join trade associations, and participate in regional economic initiatives to further their interests. Diversification of suppliers - Businesses can diversify their supplier base by sourcing raw materials or goods from other African countries. This reduces dependency on a single supplier and can help mitigate supply chain disruptions. Invariably higher revenue and income - The market expansion that intra Africa trade can bring will lead to revenue growth and increased profit. 1.4.1. HOW DOES INTRA AFRICA TRADE IMPACT EVERYDAY BUSINESS? – ACCESS BANK Ties in nicely (correlate) with Access Bank’s vision to be the world’s most respected African bank Market access – with the strong presence the bank has across a number of African countries, the bank can offer a variety of businesses access to financial services. Great opportunity for intra Africa cross border payment especially as Access Bank has an intent to be the payment gateway for Africa. Opportunities for trade finance products which can help businesses manage risks associated with cross border trade. Identifying and recruiting talents across the continent for Access Bank becomes easier. 1.5. CLASS EXERCISES “In West Africa for instance there was the Trans Saharan trade which was a highly developed trading route between the Northern Africans and the West Africans. Then came colonization with its balkanization of the continent and exploitation of both the natural and human resources. ”This is a factual statement that shows the impact of Colonial Borders. a) Discuss how arbitrary colonial borders, often drawn without regard for pre-existing trade routes or ethnic divisions, hindered intra-African trade? b) How did these random borders fragment regions and communities? c) Considering the fact that colonial powers primarily focused on extracting valuable resources from Africa, often at the expense of local industries and economies. In your opinion, how did this hinder the development of trade? 6 | Page Intra Africa Trade 2.0. THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA) IN ACTION The AfCFTA is the world’s largest free trade area bringing together the 55 countries of the African Union (AU) and eight (8) Regional Economic Communities (RECs). The overall mandate of the AfCFTA is to create a single continental market with a population of about 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion. 2.1. OBJECTIVES OF AfCFTA 1. Increased intra-African trade: due to the single market created. 2. Economic growth: due to being the largest FZE worth 3.4trillion in combined GDP. 3. Job creation: it would create new job opportunities through promoting trade & investment. 4. Regional integration: through the creation of common market, cross border development 5. Poverty reduction: through economic growth, new job opportunities 6. Increased competitiveness: among African businesses. due to access to a larger market 2.2. KEY COMPONENTS AND PILLARS OF AfCFTA 1. Rules of Origin - Negotiators have reached 87.8% agreement on the rules of origin 2. Sanitary and Phytosanitary - It addresses sanitary & phytosanitary standards 3. Good and services protocol - This outlines the rules and regulations for trade in the area 4. Non tariff and technical barriers - Aims to reduce non-tariff & technical barriers to trade. 5. Enforceable dispute settlement - Agreement includes enforceable dispute settlement mechanism. 6. Trade Remedies - Addresses unfair trade practices & protects domestic industries. 7. Customs and trade facilitation - Streamline customs procedure and promote efficient trade flows. 2.2.1. AfCFTA & Opportunities For African Businesses The African Continental Free Trade Area (AfCFTA) presents several business opportunities for African businesses and individuals. Here are some ways in which the AfCFTA can create business opportunities. 1. Expanded market Access - The single market provides African business with an expanded market. 2. Increased intra-African Trade - The AfCFTA reduces trade barriers by promoting free flow of goods and services. 3. Regional Value chain - The agreement encourages regional value chains, with production in different countries in the region. 4. Foreign direct investment - The improved business environment under AfCFTA is an attraction for FDI to Africa 7 | Page Intra Africa Trade 5. Job creation - The growth of businesses and industries resulting from the AfCFTA can lead to job creation across various sectors. This can provide employment opportunities for African individuals and contribute to poverty reduction and economic development. 6. Digital trade and E-commerce - The AfCFTA recognizes the importance of digital trade and e-commerce in driving economic growth. It aims to promote digital connectivity, cross-border data flows, and the development of digital infrastructure. This can create business opportunities in the digital economy for African businesses and individuals. These are some of the ways in which the AfCFTA can create business opportunities for African businesses and individuals. The agreement is expected to create a single continental market with a population of about 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion 1 2.3. DEMYSTIFYING AfCFTA - IMPORTANCE OF AfCFTA TO AFRICA 1. Increased intra-African trade - The AfCFTA has the potential to boost intra-African trade, which currently accounts for only 16% of the continent’s total trade. By eliminating trade barriers, the agreement seeks to promote industrialization, economic diversification, and structural transformation across the continent. 2. Economic Integration - The AfCFTA is a significant step towards the economic integration of Africa. The agreement aims to create a single market for goods and services, which will enable the free flow of trade across the continent. 3. Single Market - It is expected to create a single continental market with a population of about 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion. And with the potential to increase intra-African trade by up to 52.3% 4. Addressing challenges - The AfCFTA could also help to address some of the challenges facing African economies, such as small markets, low levels of industrialization, and a lack of diversification. By creating a larger market, the agreement could attract more investment, encourage the development of regional value chains, and promote the growth of small and medium-sized enterprises. 8 | Page Intra Africa Trade 3.0. ACCESS BANK AND AfCFTA: REAL WORLD IMPACT Overview The AfCFTA has the potential to boost Africa’s economic development by promoting industrialization, economic diversification, and structural transformation. It aims to increase intra-African trade, create a larger market, attract more investment, and encourage the growth of small and medium-sized enterprises. By eliminating trade barriers and harmonising policies, the agreement could lift millions of Africans out of extreme poverty, increase incomes, and provide better job opportunities Access Bank PLC: As one of the leading banks in Africa, Access Bank PLC can benefit from the opportunities created by the AfCFTA. The bank can leverage the expanded market and increased trade activities to grow its customer base, expand its operations, and offer a wider range of financial services3. Access Bank PLC can also play a crucial role in facilitating trade finance and supporting businesses across Africa to take advantage of the AfCFTA 3.1. ACCESS BANK AND AfCFTA: REAL WORLD IMPACT 1. Facilitating Trade Finance - Access Bank can play a pivotal role in providing trade finance solutions to businesses engaging in cross-border trade within the AfCFTA region. This support can include letters of credit, trade guarantees, and financing for import and export activities. 2. Enhancing payment systems - Access Bank can work to improve and expand digital payment systems and infrastructure, making it easier and more cost-effective for businesses to transact across borders. This can include seamless cross-border payments and foreign exchange services. 3. Promoting Financial inclusion - By extending financial services to small and medium- sized enterprises (SMEs) engaged in intra-Africa trade, Access Bank can promote financial inclusion and empower businesses that were previously excluded from formal financial systems. 4. Investment in Infrastructure - The bank can invest in infrastructure development projects that support trade, such as logistics, transportation, and warehousing facilities, improving the efficiency and competitiveness of intra-Africa trade routes. 5. Risk Mitigation - Access Bank can offer risk mitigation services, including trade credit insurance and foreign exchange risk hedging, to protect businesses from potential trade- related risks and uncertainties. 9 | Page Intra Africa Trade 6. Trade information hub - The bank can establish a trade information hub, providing businesses with market insights, trade regulations, and documentation support, helping them navigate the complexities of cross-border trade within the AfCFTA. 7. Capacity Building - Access Bank can engage in capacity-building initiatives, including training programs and workshops, to equip businesses with the knowledge and skills needed to succeed in intra-Africa trade. 8. Supporting Exporting industries - The bank can focus on sectors with export potential, such as agriculture, manufacturing, and services, by offering specialised financial products and advisory services to help businesses in these industries expand their reach within the AfCFTA region. 10 | Page Intra Africa Trade 4.0. OVERCOMING CHALLENGES: ACCESS BANK'S STRATEGIES 4.1. Identifying Challenges of Intra African Trade 4.1.1. Trade Barriers & Obstacles: The challenges hindering the free flow of trade on the African Continent encompass: · Policy Challenges: Lack of policy harmonisation across African governments due to a failure of governments to cooperate on border inspection policy, intellectual policy and phytosanitary measures. Policy challenges are also exacerbated by the seeming inability of African governments to provide an enabling environment for domestic operators to be competitive in the face of trade liberalisation, which increases political pressure to protect domestic industries or face the repercussions in electoral cycles. · Infrastructural Gaps: Poor state of transport infrastructure including seaport, highway, rail network: Absence of railway to move merchandise from one country to the other. Sea-links are absent which makes sea freighting a problem, bad road networks mixed with police and customs checkpoints where bribery is prevalent. · Inadequate communication infrastructure: many countries are landlocked which require robust terrestrial networks to ensure connectivity between the different territories and the development of data centres. · Financial System: The absence of an established cross border payment system hinders the free flow of capital, payment for goods and services, limits the size of economic transactions. · Tariffs and Taxes: Additional financial burdens imposed on imports and exports. · Non-Tariff Barriers (NTBs): Regulatory complexities, quotas, and licensing requisites. · Cultural and Language Differences: Communicative barriers hindering comprehension and cooperation. · Bureaucratic Red Tape: Complex administrative processes, paperwork, and formalities governing trade transactions. · Political Instability: Rapid changes in government policies affecting trade agreements and operations. · Currency Fluctuations: Unpredictable variations in exchange rates affecting trade values and transactions. 11 | Page Intra Africa Trade · Lack of Market Information: Difficulty in comprehending market demands, trends, and consumer preferences. · Legal and Regulatory Differences: Diverse laws, policies, and regulations across African nations challenging trade harmonisation. INTRA-AFRICAN TRADE IS POSSIBLE I. With massive infrastructural development. II. Elimination of visa and border restrictions III. Reduction of transportation cost IV. New paradigm towards goods and services within the region. 4.1.2. AFREXIMBANK INTRA-AFRICA TRADE FAIR The African Export-Import Bank (Afreximbank) put together the inaugural Intra-African Trade Fair (IATF) in 2018, to address the lack of trade and market information, as a key intervention aimed at boosting regional trade in Africa and it was the biggest gathering of buyers and sellers on the continent, with 1,000 exhibitors and more than 70,000 visitors in attendance. One of the key objectives of the IATF is to provide a platform for exchange of trade information. The Intra- Africa trade fair was started to address the lack of trade within the region, by boosting trade within the region and to provide a platform for the exchange of trade information. We can start to see significant improvement in the volume of trade within the continent with massive infrastructural development, the elimination of visa and border restrictions, significant reduction of transportation cost and a whole new paradigm towards goods and services within the region. 12 | Page Intra Africa Trade 4.2. Practical Solutions: Access Bank's Approach 4.2.1. Innovative Financial Solutions: Intra-African trade often faces financial challenges that inhibit growth and efficiency. Addressing these challenges requires innovative financial solutions tailored to the specific needs of traders. This involves Customised Financial Packages designed to suit different trade requirements. These packages could encompass flexible financing terms, credit facilities, and payment arrangements that ease transactions and encourage trade between African nations. Another crucial aspect is Foreign Exchange Risk Management, where strategic hedging techniques are employed to minimise the adverse effects of volatile currency fluctuations. This can involve options like forward contracts, swaps, or other financial derivatives to mitigate risks and provide stability in cross-border transactions. Trade Finance Support plays a vital role in facilitating trade. This involves offering financial instruments such as letters of credit and trade financing options to support exporters and importers, thus boosting trade activities within the African continent. 4.2.2. Collaborative Partnerships: Collaborative efforts are essential for addressing the complex nature of trade barriers in the African context. Global Alliances involve forming partnerships with international organisations. By working closely with these entities, trade barriers can be better understood and effectively navigated through shared knowledge, expertise, and resources. Government Engagement is equally crucial. Active involvement and collaboration with governments allow advocacy for trade-friendly policies and regulations that encourage intra-African trade. This engagement can lead to policy reforms, tariff reductions, and the establishment of more conducive trade environments. 4.2.3. Leveraging Technology: In the modern era, leveraging technology is pivotal for enhancing trade efficiency and transparency. Digital Trade Platforms are integral to this approach. These platforms offer a streamlined and efficient way to conduct trade operations, including online documentation, digital payments, and real-time tracking of shipments. They foster a digital ecosystem that facilitates communication and collaboration between traders. 13 | Page Intra Africa Trade Harnessing the power of Data Analytics is another significant aspect. By analysing market data, trade patterns, and consumer behaviours, informed trade decisions can be made. Predictive analytics and data-driven insights help develop effective strategies to tackle trade challenges and optimise trade flows within the African continent. 4.3 Summary and Reflection: A Recapitulation of the discussed trade barriers and Access Bank's strategies is presented to ensure a comprehensive understanding. Following this, a Reflective Exercise engages participants in discussing the innovative ideas and potential solutions generated during the brainstorming session. This reflection encourages participants to contemplate the possibilities of implementing these ideas and emphasises the significance of collaborative efforts in overcoming trade challenges within the African landscape. In conclusion, the holistic approach outlined in this material showcases the importance of innovative financial solutions, collaborative partnerships, and leveraging technology to bolster intra-African trade. It underlines the necessity of collective efforts and emphasises the potential for significant growth and prosperity through an integrated and thriving Intra- African Trade landscape. 14 | Page Intra Africa Trade 5.0. BEYOND BANKING: ACCESS BANK'S AFRICA EXPANSION 5.1. ACCESS BANK'S JOURNEY TO BECOMING A PAN-AFRICAN FINANCIAL INSTITUTION. Access Bank's Pan-African Expansion Timeline 5.1.1. Foundational Years - 1988-2001 1988: Issued a banking licence. 1989: Incorporated as a privately owned commercial bank and commenced operations at the Burma Road, Apapa Head Office. 1998: Became a Public Limited Liability Company and was listed on the Nigeria Stock Exchange. 2001: Obtained a Universal Banking License from the CBN. 5.1.2. Leadership and Transformation - 2002-2007 2002: Aigboje Aig-Imoukhuede appointed as MD/CEO and Herbert Wigwe as Deputy MD. A transformational agenda was set with goals including assembling a strong management team, introducing a culture of excellence, expanding branch networks, and creating a world-class brand. 2003: Achieved 100% balance sheet growth and declared a dividend for shareholders for the first time in three years. 2004: Raised over N14.5 billion in a public offer and received accolades for technological excellence. 2007: Successfully raised capital through a GDR placement and expanded into Sierra Leone and The Gambia. 5.1.3. Pan-African Expansion - 2008-2022 2008: Commenced business in DRC through an acquisition. 2009: Expanded into Ghana and Rwanda. 2012: Achieved recognition as 'Best Bank in West Africa', revised its corporate philosophy, and listed on the London Stock Exchange. 2013: Articulated a 5-year plan aiming to become the 'World’s Most Respected African Bank by 2017' and achieved an AA- credit rating from S&P. 2015: Launched a lending program in Ghana. 2019: Merged with Diamond Bank. 2020: Expanded into Kenya through acquisition 2021: Expanded into Botswana through acquisition. 2022: Made inroads into Angola through acquisition. 15 | Page Intra Africa Trade 5.2. HOW ACCESS BANK'S GROWTH ALIGNS WITH AfCFTA GOALS. 1) Creation of a single market: Access Bank's consistent expansion across African countries, such as Sierra Leone, The Gambia, DRC, Ghana, Rwanda, Botswana, and Angola, contributes to the creation of a single market. With a presence in multiple African nations, the bank is naturally facilitating the free flow of financial services, investments, and even human capital across the continent. 2) Strengthening Intra-African commerce: The bank's integration endeavours, such as its merger with Diamond Bank and the acquisitions of BancABC and Finibanco, underscore its commitment to intra-African commerce. By fortifying its financial infrastructure across Africa, Access Bank plays a pivotal role in promoting trade coordination and collaboration. 3) Championing regional and pan-African cohesion: Access Bank's deliberate foray into nations like Sierra Leone, The Gambia, DRC, and Rwanda symbolises its dedication to African unity. By weaving a financial tapestry across these nations, Access Bank acts as a bridge, easing economic interactions and promoting regional cohesion. 4) Elevating African Industrial Prowess: Access Bank's achievements, such as receiving the Hewlett Packard Award for the best implementation of a core banking application and its partnership with the European Investment Bank for SME facilitation, highlight its dedication to fostering industrial competitiveness. Through technological advancements and resource allocation, the bank supports businesses to compete effectively on a continental scale. 5.3. REAL-WORLD EXAMPLES OF ACCESS BANK'S INITIATIVES IN DIFFERENT AFRICAN REGIONS. 5.3.1. Access Bank and the African Natural Capital Alliance (ANCA) In collaboration with multiple institutions, Access Bank became a founding member of ANCA. The alliance is aimed at harnessing the financial sector’s efforts regarding nature- related risks and opportunities in Africa. ANCA is designed to address the dip in natural capital in Africa, where many countries' GDPs are largely nature-dependent. Access Bank's MD, Roosevelt Ogbonna, emphasised that the alliance aligns with the bank's sustainability principles. In 2019, Access Bank issued Africa’s first-ever green bond for environmentally beneficial projects, including flood defence, agriculture irrigation, and renewable energy. 16 | Page Intra Africa Trade The bank has also initiated projects like the Green Social Entrepreneurship Programme and the Tyre Upcycling Initiative that have made sustainable impacts across Africa. 5.3.2. MFS Africa and Access Bank Collaboration MFS Africa, a vast digital payments network, partnered with Access Bank to simplify transfers for AccessAfrica customers. AccessAfrica is an Access Bank service facilitating global transfers and receipts of money. The collaboration extends the cross-border payment infrastructure, promoting financial inclusion and economic growth. 5.3.3. UNDP, Vodafone, and Access Bank Initiative The United Nations Development Programme (UNDP) collaborated with Vodafone Ghana and Access Bank to train 60 local women in the Upper East Region of Ghana. The program's aim is to help women understand and utilize technological banking systems, enabling them to save and grow their business capital. The women, drawn from various regions, were trained on transacting or saving money via mobile money platforms. Vodafone Ghana Foundation is backing the initiative to support women in widening their reach in business. Access Bank, in alignment with the program, aims to promote cashless transactions, especially during the pandemic, to ensure safety and efficiency. 5.3.4.Deloitte Ghana and Access Bank Ghana Partnership Deloitte Ghana partnered with Access Bank Ghana to support the growth and resilience of Ghana's SMEs and trade associations. The collaboration focuses on addressing challenges faced by SMEs in Ghana. As part of the 'SME Business Interaction Series,' Deloitte will provide capacity- building clinics, business advisory services, and financial support. The goal is to assist 10,000 SMEs and trade associations within a year. The partnership aims to bolster Ghana's SME sector, contributing to the nation's economic growth and prosperity. 17 | Page Intra Africa Trade 6.0. INTRA AFRICA TRADE REAL CASE SCENARIOS – PAPSS The Pan-African Payment Settlement System (PAPSS) is a centralized payment and settlement platform for intra-African trade and commerce payments which was created through a partnership between the West Africa Monetary Institute (WAMI) and the African Export-Import Bank. 6.1. Cross Border Trade - Access Bank PAPSS PAPSS is a financial market infrastructure that enables instant, cross-border payments in local currencies between African markets. It is designed to revolutionize cross-border payments, making them faster, cheaper, and more secure than ever before. 6.2. Intra Africa Trade Real Case scenarios - Access Bank PAPSS PAPSS makes payments easier and formalizes informal cross-border trade, while supporting the Africa Continental Free Trade Area agreement (AfCFTA). This is aimed at boosting trade and payments among corporates and retail customers. PAPSS is available to all Access Bank customers who are engaged in Intra-Africa Trade. Settlement is on a Multilateral Net Basis and agreed settlement currencies. Operates on a 24/7 basis. CBN settlement will be strictly for eligible Trade transactions for SMEs and Corporates. Access Bank PAPSS PAPSS is currently live in the West African states Monetary Zone (WAMZ) in the following countries: Nigeria, Gambia, Sierra Leone, Liberia, Ghana, and Guinea. The Beneficiary bank must be a PAPSS participating bank. Transactions are supported in local currencies i.e., from the sender currency to the beneficiary currency. Benefits of Access Bank PAPSS Partnership and Cooperation between institutions: West Africa Monetary Institute (WAMI) & African Export-Import Bank (Afreximbank). Access Bank through the PAPSS model addresses the intra Africa challenges and facilitate intra-African trade. Teaming and Partnership has created alternative to the current expensive and lengthy correspondent banking relationships, through a simple, low-cost and risk controlled instant payment clearing and settlement system. 18 | Page Intra Africa Trade Payments are conducted instantly and in local currencies to regain value and domesticate intra- Africa payments as part of the ongoing pursuit of African- economic advancement. The system conducts immediate checks for compliance, legal, and sanctions, ensuring that payments are processed within 120 seconds. Reduction in costs associated with correspondent banking fees and central delays. Instant payment in local currencies. Enables clients to fully fund their trade obligations as against the current fragmented client’s FX purchase model. The beneficiary has immediate access to funds. Removes the dependencies on third currencies and correspondent banking; facilitates intra-African trade. Guarantees the final settlement of funds for the recipient participant. 19 | Page Intra Africa Trade 7.0. THE FUTURE OF INTRA AFRICA TRADE AND YOUR ROLE 7.1. Emerging Sectors and Industries within AfCFTA The AfCFTA will create the world’s largest free trade area, bringing transformative change and tremendous economic and business opportunities. The adoption of the African Continental Free Trade Area (AfCFTA) will accelerate intra- African trade and develop regional and local value chains, creating new business dynamics that offer investors access to a population of 1.7 billion people with combined business and consumer spending reaching $6.7 billion by 2030.8. To better understand the opportunities available, four high-potential sectors were initially selected by the AfCFTA to analyse in its Private-Sector Engagement Strategy as sectors representing opportunities for companies looking to invest in Africa: automotive; agriculture and agro-processing; pharmaceuticals; and transport and logistics. These four sectors are expected to see rapid acceleration in production and trade volumes under the AfCFTA, given that they have a high potential to meet local demand with local production. A). AUTOMOTIVE INDUSTRY The automotive industry in Africa is expected to grow to more than $42 billion by 2027 due to increasing domestic demand, rising incomes and high projections for intra-African trade. International companies have found success in the automotive industry by partnering with African countries, signalling that the automotive sector is ripe for new and increased investment strengthened by the AfCFTA.Across the continent, there is an average annual demand for 2.4 million motor cars and 300,000 commercial vehicles. This domestic demand — which is rising due to the continent- wide increase in disposable income, strong growth of the middle class and rapid urbanisation — is currently being met primarily by imported used vehicles. However, domestic production has also been growing by an average of 7% annually over the past few years. Today, Morocco and South Africa are leading the way as major players in the automotive sector, making up 80% of African exports, with Algeria also experiencing rapid growth. 20 | Page Intra Africa Trade The AfCFTA unlocks several opportunities for African and global businesses in the automotive industry to seize, building upon strong foundations in a new era of frictionless African trade. African automotive manufacturers will benefit from all the advantages of economies of scale; essential for the competitive manufacturing of automotives. Reduced tariffs across the continent for inputs like aluminium from Mozambique or rubber in Cote d’Ivoire will mean the African industry would together become more dynamic. The AfCFTA’s rules of origin will also help set common thresholds for value-added levels, and if these are progressively harmonised across regional communities, these more general and co-equal rules will help stimulate trade. The continent’s leadership is actively working towards improving the investment environment for the automotive sector specifically. There is significant political will by African governments and private sector players to develop automotive regional value chains because of the sector’s historic contribution to industrialisation. B). AGRICULTURE Agriculture offers opportunities for economic growth, job creation, poverty reduction and food security, with the potential for even more value added with agro processing. Intra-African trade in agriculture is expected to increase by 574% by 2030 if tariffs are eliminated under the AfCFTA. Intra-continental agricultural exports have steadily grown over the past two decades. Intra-regional trade in Africa is attributable to regional factors such as geographic proximity, cultural similarities, historical trading relationships and preferential trade agreements, while current policy and non-policy barriers to trade likely deter exchanges among African countries. However, trade occurs predominantly within regional economic communities (RECs)3 without developing a strategic web of regional supply chains within the continent. Moreover, intra- continental agricultural trade, although relatively less diversified in Africa compared to Europe, is significantly more diversified in Africa than in South Asia. Intra-continental trade expansion can leverage regional differences in the competitiveness of African countries in key food value chains (Bouët, Odjo and Zaki, 2020). The agricultural sector is characterised by small-scale farming, which is an important part of the livelihood of about three-quarters of the rural population (Lowder, Skoet and Singh, 2014). Due to the importance of the agricultural sector and the multiplier effects of increased agricultural income in downstream sectors, 21 | Page Intra Africa Trade agricultural growth is two to three times more effective in reducing poverty in developing countries than growth in other sectors (Christiaensen, Demery and Khul, 2010). The deal will be transformative for many of Africa’s industries, but given agriculture’s already central role in the continent’s economy, and its huge potential for growth, agriculture will be a prime beneficiary. According to the Forum’s report, agriculture has exceptional potential for increasing intra-African trade, meeting local demand, accelerating GDP growth, creating new jobs and improving inclusivity due to upstream and downstream linkages. It will increase value addition, meet new local demand and bring smallholder farmers — who are responsible for 80% of Africa’s food production — into wider supply chains. C). PHARMACEUTICALS Pharmaceuticals was selected as a vital value chain given its potential for more value added as a complex product, given the feasibility of overcoming traditional barriers under the AfCFTA. The AfCFTA will help increase intra-African trade in pharmaceuticals, which is currently extremely low (only 3% of demand is met by intra-African trade), leading to more resilient health supply chains. Pharmaceuticals is one of the four sectors seen to have the highest potential due to the feasibility of addressing barriers to trade and production in a short time frame, as well as the strong potential for meeting demand locally. Pharmaceuticals also have high product complexity, which can lead to greater opportunities for high local value-added production. Intra-African trade is leading to high dependency on imports (seven times more than India, for example), even though local production is possible. The pharmaceutical industry is projected to grow at 5.13% compound annual growth rate (CAGR) in 2022–2027 in Africa.44 The United Nations Industrial Development Organization (UNIDO) has identified four important factors that are leading to high projected growth in Africa’s pharmaceutical market specifically. These are: increased expenditure; expanded provision; a maturing business environment; and increased genericization. a. Increased expenditure – Increasing health investment – Rising consumerism – population, urbanisation, middle class – Increased burden of disease. 22 | Page Intra Africa Trade b. Expanded provision Expanded human resources for health and prescriber base – Evolving provider models – Increasing private-sector provision c. Maturing business environment Maturing regulatory environment – Improving investment climate – Reduced counterfeits. d. Increased “genericization” Increased confidence in generic products – Ongoing pricing pressure – Increasing push for local manufacturing D). TRANSPORT AND LOGISTICS Transport and logistics will be a crucial area for investment as an enabler of trade in goods as intra-African trade increases. The AfCFTA is projected to increase intra-African trade demand by 28%, with demand for almost 2 million trucks, 100,000 rail wagons, 250 aircraft and more than 100 vessels by 2030. Transport and logistics represents a high-potential sector due to its role as an important enabler of the trade of goods and the fact that it is the largest contributor to imports (the value of imports of freight transportation to African countries – from within and outside of the continent – is $36.8 billion annually).55 Transport and logistics includes passenger and freight transportation, third-party logistics, freight forwarding, and courier express and parcel services. A majority of intra-African exports are transported over land (60% of automotive exports, 56% of pharmaceutical exports and 60% of agro-processing product exports). As for maritime trade, this is projected to increase from 58 million to 132 million tons by 2030 with the implementation of AfCFTA. Road and maritime freight transportation therefore offer, at present, the biggest opportunity as the infrastructure for air and rail transportation is still being developed. Transport and logistics barriers have historically held African countries back as they have faced higher custom delay periods, lower percentages of paved roads and a higher loss of goods due to limited cold chains compared to other regions in the world. All of these challenges are being addressed through the AfCFTA. The establishment of the AfCFTA is projected to increase intra-African freight demand by 28%, leading to demand for almost 2 million trucks, 100,000 rail wagons, 250 aircraft and more than 100 vessels by 2030.58 Large logistics companies have historically been too expensive for African companies to use, but that is changing with the rise of new digital logistics companies. 23 | Page