Category: Blog

Prosper Africa Trends: “Eco” On Currency Liberalization – Accelerating African Trade Gateways

Accelerating African Trade – The “Eco” of Liberalization

Africa, including the former French West African colonies, continues on promoting barrier free Pan African trade.  Facilitating open trade and a common currency accelerates opportunities for the world’s fastest growing continent to prosper. Positive steps to increase African investment by releasing African reserves from the stewardship and use by French Treasury were announced this week by President Marcon. Simply put, as proposed, previously sequestered funds are now available for direct African investment.  The proposed decommissioning of the French-linked West African CFA franc was also announced with the endorsement of the “Eco” as the replacement currency.   One expected positive outcome of liberalization is continuation of promoting a common currency, opening pan -African trade and accelerating trade flows.

Africa Trade Alliances – The World’s Largest since the World Trade Organization

Parallel paths to promote African autonomy continue with regional trade alliances. Countering global trends towards nationalization, North Africa including Tunisia, increasingly unite as trade partners. The West African Economic and Monetary Union and the Economic Community of West African States (ECOWAS) minimize trade barriers and harmonize customs practices.  English and French speaking Africa links formalized in March 2019 with the African Continental Free Trade Area (AfCFTA) – the world’s largest since the 1994 World Trade Organization. As perspective COMESA, similarly with its 21-nation membership serves 560 million people links Tunisia, Egypt and Madagascar improving the focus on Technology and Biotech developments.

Gateway into Global Markets – Tunisia

Boosting inter-regional and global trade frameworks is constructive of the continent. Unleashing Africa’s long-stymied economic potential strengthen supply chains and spread shared expertise is both aspirational and realistic.  Increased Pan-African trade flows increasingly funneled into Europe and the United States from gateway countries like North Africa led by Tunisia, are irreversible.  The Tunisian and other American Chamber of Commerce actions, guide export expansion, ratify opportunities for Pan African business and trade-linked profitably – gradually erasing the shadow of a colonial past.

AmCham Advances Tunisian Energy Strategy– Supporting the 2020 Energy and Climate Change Agenda

AmCham continues its policy advocacy in alignment with national goals to promote energy independence. In a proactive engagement with key private and public stakeholders, AmCham initiated a series of informational and strategy sessions. Meetings held in May created an action-oriented agenda for the advanced 2019 Joint Economic Commission (JEC2) and “Door Knock” dialogue led by Mr. Naceur Hidoussi AmCham’s senior leaders and the American Congressional delegation in Washington, DC. A February 2020 update session chaired by AmCham Board Member Rym Bedoui Ayari will track progress from the Spring 2019 discussions in a dynamic industry implementation round table on both energy and climate change issues.

Promoting renewable and alternative energy solutions with an added focus on climate change, remains an AmCham priority. Tunisian increasing energy dependency is reflected in the INS Data below. AmCham continues to track the Government’s proactive agenda committed to in the Spring AmCham session designed to facilitate licensing for new alternative energy projects designed to accelerate the availably of new capacity. AmCham’s actions in securing these Government initiatives, align well with the Tunisian Energy Reform Plan. TAP/Banet (October 22) cited Tunisia’s Energy Reform Plan is essential to easing the country’s budget and trade balance constraints along with the removal of energy subsidies.

“An alternative energy project could be operational as soon as installation is complete”.

AmCham’s pre- Door Knock and JEC2 Advocacy and Government of Tunisia dialogue resulted in a commitment to the following action items:

  • Ministries (Industry/Energy) will develop transparent online processes for both Investors and administrators in Alternative Energy projects
  • Installation and operational time will be accelerated by more timely government oversight of required technical equipment installation
  • Government oversight of the installation of the energy “ticker/counter” device essential to linking alternative power sources to the grid could be pre-approved with pre-ordered

Shifting Geo-Political Risks – Tunisian Energy Dependency (2010 -2019)

Babnet/Tap (Oct 22) reported in 2018, the total amount of subsidies exceeded 7% of the state budget, in addition to hydrocarbon imports which accounted for one-third of the trade deficit. AmCham notes Tunisian exposure to geo-political risks and related energy dependencies increased as illustrated below.

  • Imports from the EU (Chart 1) have increased post-revolution reflecting decreased supply from the region (i.e. political/social volatility in Libya and a lesser extent Algeria)
  • The EU, specifically Italy may source energy from region thus Tunisia’s Central Bank reserve positions are increasingly exposed to both USD and Euro depreciation/appreciation trends.
  • Imports from the US have remained relatively stable
Chart 1 – Energy Dependencies – Regional Focus Shifts to EU (2010-2019 YTD) (Source INS Data – Subject to Data Gaps/AmCham)
Chart 2: Top 12 Energy Imports (Kg) -2010-2019 Italy Sourced Imports Increase (Source: INS Data – Subject to Data Gaps/AmCham)

Tunisia – Positive Regional Growth and Improving Trade Alliances COMESA

Overall regional bright spots and commitment to pan-African free trade agreements are expected to positively bolster Tunisia’s resiliency.  International perspectives support an optimistic outlook for continued regional growth. Moody’s Inside Africa(October 2019) cite Egypt’s rate cut and easing inflation as supporting bank revenue and economic growth.  Recent actions by the Central Bank of Morocco, are also viewed by Moody’s as positive for the Moroccan banking sector and by implication, Moroccan ownership interests in the Tunisian financial sector.

Trade alliances for Tunisia, North Africa, and the continent  are positively recognized by AmCham Tunisia, although remaining neutral on  recent political developments.  Fitch’s Africa Monitor (November Edition 2019), highlights Tunisia’s “challenging policy environment” post-election, coupled with a “stormier global environment”.   For Africa generally, Fitch Solution reports strengthening of trade agreements including the May 2019 African Continental Free-Trade Area — the world’s largest free-trade zone. Economic and trade integration for Africa are expected to promote higher growth and create new investment opportunities. This is good news for the investment community. Tunisia trade and investment benefit from its entry into COMESA last year and, as announced at the September meeting,  it’s proposed entry by year end 2019 to the COMESA Free Trade Area.