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AfCFTA: A shield for African businesses amid western economic pressures 

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As the global trade landscape becomes increasingly transactional, with rising protectionism and the imposition of new tariffs by Western economies such as the United States, Africa’s businesses find themselves navigating turbulent waters. Yet, amidst these challenges, the African Continental Free Trade Area (AfCFTA) emerges as a beacon of hope, offering unparalleled opportunities for intra-African trade, industrialization, and economic resilience. 

The AfCFTA, launched in 2021, is the world’s largest free trade area, uniting 55 African nations into a single market of 1.3 billion people with a combined GDP of $3.4 trillion. By eliminating tariffs on 90% of goods and reducing non-tariff barriers, it seeks to transform Africa’s economic landscape. For businesses across the continent, AfCFTA is not just a trade agreement—it is a lifeline in an era of global economic uncertainty.

For decades, Africa’s economies have been shaped by a colonial-era trade model that prioritized raw material exports to Western economies while importing value-added goods at a premium. This dependency has left African businesses vulnerable to external shocks and volatile commodity markets. The AfCFTA aims to rewrite this narrative by fostering intra-African trade and promoting value addition within the continent.

According to the World Bank, full implementation of AfCFTA could boost intra-African trade by 45% by 2035 and increase Africa’s exports to global markets by 32%. This shift is particularly significant as Western economies impose new tariffs and trade barriers, which threaten to marginalize African exports further. By creating regional value chains and advancing industrialization, AfCFTA offers African businesses an opportunity to reduce reliance on external markets and build self-sufficiency.

Small and medium enterprises (SMEs), which form the backbone of Africa’s economy, stand to benefit immensely from AfCFTA. The agreement simplifies customs procedures and reduces cross-border transaction costs, enabling SMEs to expand their reach beyond national borders. For instance, a coffee farmer in Ethiopia can now access markets in West Africa without facing prohibitive tariffs or bureaucratic hurdles.

Moreover, AfCFTA’s emphasis on digital trade and e-commerce creates new avenues for SMEs to participate in the global economy. With over 60% of Africa’s population under the age of 25, the continent is poised to become a hub for tech-driven innovation. By leveraging digital platforms, African entrepreneurs can tap into regional markets while bypassing traditional barriers imposed by Western economies.

Recent U.S. tariff hikes exemplify the growing trend of economic nationalism that threatens to undermine global trade norms. These measures disproportionately impact developing economies like those in Africa, which rely on exports to sustain growth. However, AfCFTA provides a counterbalance by strengthening regional integration and enabling African businesses to diversify their markets.

For example, instead of exporting raw materials like cocoa or oil to Western markets subject to high tariffs, African countries can process these resources locally and trade finished goods within the continent. This approach not only adds value but also creates jobs and fosters economic resilience.

AfCFTA’s potential extends beyond trade—it is also a magnet for foreign direct investment (FDI). By creating a unified market with harmonized regulations on investment and intellectual property rights, AfCFTA reduces the risks associated with fragmented policies across individual countries. The World Bank projects that FDI into Africa could increase by up to 159% under AfCFTA, bringing much-needed capital, technology, and skills.

This influx of investment is particularly critical as Western economies tighten their purse strings on development aid and impose restrictive trade policies. By positioning itself as an attractive destination for investors from Asia, the Middle East, and within Africa itself, the continent can mitigate the impact of declining support from traditional partners.

Despite its promise, AfCFTA faces several hurdles that must be addressed to unlock its full potential. Inadequate infrastructure remains a significant bottleneck; according to the African Development Bank (AfDB), annual investments of $130–$170 billion are needed to bridge infrastructure gaps in transport, energy, and digital connectivity.

Additionally, effective implementation of non-restrictive rules of origin is essential to prevent misuse of AfCFTA provisions by external players seeking backdoor access to African markets. Policymakers must also ensure that excluded products are minimized to maximize market access across sectors.

One of AfCFTA’s most transformative aspects is its potential to drive inclusive growth across sectors. Hanan Morsy of the United Nations Economic Commission for Africa notes that high-value sectors like agribusiness and manufacturing stand to benefit significantly from increased intra-African trade. For instance, Africa exports $10 billion worth of fertilizers annually while importing $3.7 billion—a gap that regional integration can address through localized production.

Furthermore, gender inclusion is critical for maximizing AfCFTA’s impact. Women account for a substantial share of Africa’s informal traders but often face barriers such as limited access to credit and market information. By prioritizing gender-sensitive policies under AfCFTA, governments can empower women entrepreneurs and enhance their contributions to economic growth.

As Western economies turn inward with protectionist policies like U.S. tariff hikes, Africa must look within for solutions that safeguard its economic future. The African Continental Free Trade Area offers a pathway toward self-reliance by fostering regional integration, attracting investment, and empowering local businesses.

For African entrepreneurs navigating an increasingly hostile global trade environment, AfCFTA represents more than an opportunity—it is a necessity. By embracing this transformative agreement and addressing its implementation challenges head-on, Africa can chart a course toward sustainable development while asserting its place in the global economy as a united force.

AfCFTA is not just about trade—it is about rewriting Africa’s economic story in an era where resilience has become the ultimate currency.

Exploring Sustainable Food Systems

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As urbanization accelerates globally, food systems face mounting challenges in ensuring healthy, sustainable, and affordable diets for growing city populations. In Ethiopia, where urban areas like Addis Ababa are expanding rapidly, addressing these challenges has become a critical priority. Professor Charles Spillane, a seasoned expert in agri-food research from the University of Galway in Ireland, sheds light on the EcoFoodSystems project—a groundbreaking initiative funded by the European Union and the International Fund for Agricultural Development (IFAD). 

In an exclusive interview with Capital, Professor Spillane discusses how the EcoFoodSystems project aims to transform urban food systems in Addis Ababa and Hanoi, Vietnam, through research-driven solutions that integrate nutrition, sustainability, and affordability. He highlights the importance of collaborative efforts between stakeholders, including government bodies, NGOs, and private sector actors, to achieve impactful changes in food systems. 

From tackling malnutrition and obesity to addressing climate resilience and environmental footprints, the EcoFoodSystems project is poised to provide actionable insights and tools for policymakers and practitioners alike. This conversation delves into the project’s objectives, expected outcomes, and its role in shaping sustainable food systems for urban regions worldwide. Excerpts;

Capital: What is EcoFoodSystems project?

Charles Spillane: EcoFood Systems that is funded by the European Union and also the International Fund for Agriculture Development, which is an agricultural development bank based here in Ethiopia. So our EcoFood Systems project is a project that’s focusing on the challenge of how diets are changing in cities, particularly in urban areas. And so we’re focused on two city regions. So the city region of Addis Ababa, but also the city region of Hanoi in Vietnam.

And what we’re doing is we’re trying to do research with the actors, if you want to call it that, within the food system of Ethiopia, but also within the food system more specifically within Addis Ababa city region to try to do research that would help with transitions of diets of the consumers in Addis Ababa towards diets that are healthier, more sustainable and more affordable. And this is a big challenge, how to achieve all of those three things.

They’re all desirable, but trying to achieve them all, there are different sectors trying to pursue some of them. So the nutrition and health sector may pursue nutrition and health, the agriculture sector may pursue sustainability and agriculture, the economic sector may pursue affordability of diets and incomes, and so they’re all interrelated in some ways we’re working very closely with the Ethiopian Public Health Institute. which is under the Ministry of Health within Ethiopia and they’re the body mandated.

So really we’re a research project to work with the stakeholders in the food system to try and do pieces of research and also try to see if we can work with the stakeholders to identify decision support tools that would help them to make better decisions, faster decisions, more informed decisions. So that’s really what we’re trying to do.

Capital: What are the key expected outcomes of the EcoFoodSystems project, and how will its success be measured in improving the diets of Addis Ababa’s citizens?

Charles: So a research project can generate new knowledge or it can improve existing knowledge synthesize existing evidence and we need to do that in a manner that is demand driven so that it is what is needed by the stakeholders. the ultimate, we will generate what are called research outputs which are the research will generate findings, some of those could be tools for decision making, some of those could be policy briefs, some of those could be data sets and so forth and we will do that with the stakeholders.

But then our stakeholders are really the entities that take that forward to have the impact on the diet. So we need to work with the entities that are interacting with the diets of the consumers in Addis Ababa, and particularly those whose diets are those who are most marginalized nutritionally, that we call it that.

So on that side we have people who suffer from undernutrition, so they don’t have enough either foods in a calorie context or enough energy or they don’t have enough nutrients, so they don’t have a healthy diet and they lack access.

And then on the other side, there is also a growing problem of people becoming overweight and ultimately obese, which can lead to chronic disease problems like diabetes and cardiovascular disease. And that is on the rise in all countries, urban and rural, within households, many communities. And that’s a challenge for Ethiopia as a nation but for all nations. And again, so there’s a real challenge I think for all of us as consumers of food to be assisted by the stakeholders so that we can have, we can eat a healthy diet, but it should be affordable, but it also should be sustainable in terms of the planet and it should also be resilient to climate change.

Capital: Given the complexity of food systems, what are the biggest challenges you anticipate in achieving a transition towards healthier, more sustainable, and affordable diets in Addis Ababa?

Charles: There are challenges for the different sectors of how they can work better together. So that this could be the different ministries. But the government working towards inter-ministerial partnerships through the food systems transformation. Ethiopia is a leader in food systems transformation that has a pathway and there’s a policy direction and a plan that all of the actors need to follow essentially. But having said that the out everybody wants the same outcomes yeah but they all approach it in different ways but there could be benefits from them working more closely together for the same objectives and then in some instances there might be cases where one group is pursuing something but it has a negative effect on the other outcome you want so they need to there’s challenge of communication and working together across sectors and those sectors could be public and private.

It could also be the education system is particularly important but next generation so like nutritional literacy for the next generation to what extent they have an understanding of what is a healthy diet in the city because if they don’t then there’s a possibility that the city has a certain proportion of people who don’t have good health and that’s in some ways connected in with the sustainability of the city also.

Capital: How will the research findings from the EcoFoodSystems project be integrated into public health policies and programs in Ethiopia to combat malnutrition?

Charles: The research project is informed by our partners who are the stakeholders and so we conduct research that is prioritized as the purpose of this project is to priorities’ what is the highest priority research that the project should do or should be done in general. So we do that research so that it can be adopted by the stakeholders, by our partners such as EPHI, such as the Ministry, such as the NGOs, such as private sector value chains and so forth. That essentially we conduct pieces of research of many different policy options or directions or indeed we provide tools that could allow for better decision making.

Capital: With 70% of the world’s population expected to live in urban areas by 2050, how does this workshop contribute to creating a sustainable food model for other growing city regions?

Charles: The very fact that 70 % of the world’s population will live in urban areas by 2050 means that while it’s consumed in the cities, the data is grown in the countryside. So most of the vast majority of the comes from the countryside. And it from the countryside within the country, but it also comes from the countryside that we import and export to other countries. So it’s very important that there’s a strong connectivity and planning of the diets, how the diets of the cities go, with how much produce they need to communicate. They’re not distant, there’s a connection we need to bring the farm to the city and the city to the farm. In a sense, they need to connect better.

Capital: How important is the focus on urban food systems in addressing global food security and nutrition challenges, and what role do you see projects like EcoFoodSystems playing in this?

Charles: So when you talk about the urban food security, within the urban area there will be some people that are undernourished, some people that are headed in the direction of being overweight or possibly obese. That can happen within a household for young people, old people, and middle-aged people.

Capital: How can research projects like EcoFoodSystems support you in making your practices more sustainable and contributing to healthier diets in the city?

Charles: it is possible to calculate the environmental footprint of anything that is produced, whether it’s a food or anything else. And so you can calculate the amount of carbon footprint can be calculated, the water footprint, how much land is used to make the object. It can be a food, can be teff, can be tomatoes, can be oranges, bananas, whatever you want. So they can all be calculated. Some have higher footprints than others, but then the nutritionists will look at these and say some have higher nutritional levels than others. And so there’s a balancing act to make it a diet that is appropriate to the culture is that people find tasty at what to eat. That is ideally with the lowest footprint but the highest nutrition.

So our project we’re working with the agriculture side of things in terms of the supply, the environmental footprint of the supply, but also in the nutrition side because you can supply things that have low environmental footprint but they might not be nutritious.

Capital: How does the EcoFoodSystems project plan to bridge the gap between research findings and practical changes in the food systems of Addis Ababa?

Charles: The gap between research and practice, it’s really important that we do research that is demanded and prioritized by the stakeholders and that’s why we brought a very diverse group of stakeholders together to work as Ethiopian stakeholders in prioritizing what research they consider is a priority to do. When the research is prioritized, then we can work with the stakeholders to do the research. They prioritize that they would adopt and that they would implement to achieve the outcomes of changing,

Capital: Climate change poses a significant threat to food security. How will the EcoFoodSystems project ensure that the solutions developed are resilient to these challenges?

Charles: so we’re in everybody is in the midst of a climate crisis the planet is warming up and it’s going to lead to adverse weather events which are higher in frequency, more intense over time and so shocks will intensify as a result of climate change but on the agricultural system and other systems.

So we collaborate, we brought a lot of colleagues here today who work on climate modeling about future climates and so future climates can be modeled and they can be interpreted to understand whether some crops will be suitable to grow in the future are the crops not and how that might affect the diets as well. So we can begin to think about the future diets in a future climate.

Another part of that is that Ethiopia, like all other countries, has a national climate plan which is about it can be about reducing emissions in sectors of the economy or least green transitions for sectors of the economy and then also about adaptation or making systems of parts of the economy more resilient to climate shocks. So that really needs to be done in an integrated way so we work with the climate modeling community and the climate adaptation and emissions reduction community to provide supports in that direction.

Awash Insurance celebrates customers’ week with enhanced benefits 

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Awash Insurance, one of Ethiopia’s leading private insurance companies, has announced special benefits for its customers as part of its annual Customers’ Week celebration. The event, held under the theme “Thank you for putting your trust in us,” highlights the company’s commitment to rewarding loyalty and enhancing customer satisfaction.

Having joined the insurance industry over three decades ago, Awash Insurance has reaffirmed its position as the market leader among Ethiopia’s private insurers. The company reported gross premium revenue exceeding 3.1 billion birr for the 2023/24 fiscal year, a significant achievement despite challenging market conditions. Its General Insurance segment alone contributed more than 2.6 billion birr in revenue, leading the market by a wide margin among Ethiopia’s 17 private insurance companies.

Awash Insurance also celebrated its success in life insurance, collecting 443.7 million birr in premium revenue and surpassing all 18 companies operating in Ethiopia. These accomplishments reflect the company’s resilience and dedication to excellence.

As part of Customers’ Week, Awash Insurance is offering enhanced benefits for mandatory third-party coverage. Customers who purchase full vehicle insurance or renew their existing policies during this week will enjoy increased compensation limits without additional premiums. For property damage coverage it increased from 200,000 birr to 300,000 birr and Third-Party death and injury compensation is raised from 250,000 birr to 300,000 birr.

These benefits are valid for all customers who visit Awash Insurance’s headquarters, branches, or liaison offices during the celebration period.

Jibat Alemneh, CEO of Awash Insurance, emphasized the company’s focus on meeting customers’ evolving needs. “Since our inception, we have recognized our customers as the foundation of our success,” he stated. With over 90,000 loyal customers, Awash Insurance continues to prioritize reliability and innovation in its services.

Tadesse Gemeda, Chairman of the Board of Directors, echoed this sentiment: “Customers are the foundation of our existence. We are committed to improving our services by collecting feedback through regular customer visits and implementing detailed plans to enhance customer satisfaction.”

In addition to enhanced coverage benefits, Awash Insurance has also organized various activities to engage and reward customers.

These initiatives reflect Awash Insurance’s gratitude toward its customers while reaffirming its commitment to providing better service in the future.

Awash Insurance’s success story is built on a foundation of trust and innovation. With total assets exceeding 7.7 billion birr and plans for a new headquarters featuring state-of-the-art facilities, the company is poised for continued growth and leadership in Ethiopia’s insurance industry.

Birr depreciation highlights challenges of market-driven exchange rate system 

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Ethiopia’s transition to a floating exchange rate regime in July 2024 marked a significant shift in its economic policy, aimed at addressing long-standing distortions in the foreign exchange market, according to the Ethiopian Economics Association’s Quarterly Macroeconomic Updates. However, the Ethiopian Birr (ETB) has experienced steady depreciation against the US Dollar since the reform, with an 11.5% decline recorded between mid-September and December 2024. This trend underscores the complexities of adapting to a market-driven exchange rate system and signals the need for coordinated policy measures to stabilize the currency.

Following the implementation of the floating exchange rate system, the ETB stood at 114.72 ETB/USD on September 16, 2024. Over the next few months, it depreciated significantly, reaching 127.92 ETB/USD by December 31, 2024. The depreciation was driven by factors such as speculative behavior, inflationary pressures, and structural challenges within Ethiopia’s economy.

The initial post-reform period saw modest fluctuations as the market adjusted to the new policy framework. However, beginning in October, depreciation accelerated due to rising inflation and heightened demand for foreign currency. By November, the government’s decision to ban the Franco Valuta system—a mechanism allowing importers to source foreign currency independently—added further volatility to the market.

The depreciation of the ETB has had significant implications for inflation. As import costs rise due to a weaker currency, consumer prices for essential goods have increased, exacerbating inflationary pressures. Headline inflation rose from 1.2% in August to 2.4% in September 2024, reflecting the pass-through effects of exchange rate adjustments.

This dynamic poses challenges for policymakers as they balance efforts to stabilize inflation with the need to support economic growth. Tight monetary policies aimed at curbing inflation have led to liquidity constraints, making it difficult for businesses to access foreign exchange for imports.

Ethiopia’s transition to a market-driven exchange rate system represents a bold step toward economic reform but comes with significant risks that require careful management. The steady depreciation of the ETB highlights the need for coordinated efforts to stabilize key macroeconomic indicators and ensure that structural reforms translate into tangible benefits for businesses and households.