Attacks in South Africa Slow Region's Free-Trade Pursuits
The World Economic Forum on Africa this month should've doubled as a chance to start ironing out some basic obstacles to the world's largest free-trade zone, such as border delays and dilapidated transportation links.
Instead, attacks by South Africans on foreign nationals in the weeks preceding the event in Cape Town undermined the assurance by President Cyril Ramaphosa that the region's most industrial economy is open — and safe — for business. As the most advanced economy in a still-developing neighborhood, his country stands to gain most from the African Continental Free-Trade Agreement.
The United Nations has condemned a wave of xenophobic attacks in South Africa in which at least seven people died and scores of businesses were ruined and looted. Nigerian businesswoman and former World Bank Vice President Oby Ezekwesili said the attacks in South Africa could threaten the pact because such a deal needs an environment of trust and respect among nations.
- A working group of the Association of African Central Banks is exploring ways to connect the technology behind the Southern African Development Community Real Time Gross Settlement System, which is operated by the South African Reserve Bank, with payments systems in east and western Africa.
- Linking these systems will help to bolster the free-trade agreement, South African Reserve Bank Governor Lesetja Kganyago said at the WEF meetings. It will also facilitate intra-regional payments and remove some of the costs associated with having to settle such payments through U.S. and European banks. Instead of waiting for a big continental payment system, the payments systems that exist need to connect with each other, Kganyago said.
- The African Export-Import Bank earmarked $500 million to help Nigerian manufacturers access a 1.2-billion people market opened up by the continental free-trade agreement.
Charting the Trade War
South Africa's trade balance swung to a deficit in the second quarter after imports increased as the economy rebounded from its worst contraction in a decade. While the value of exports rose, the volume of outward shipments stagnated due to the slowdown in global trade.
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