Trade plays a key part in global growth and exchange of resources. However this concept remains a challenge on the world’s fastest growing continent, Africa, evidenced by the large trade imbalances through deficits and surpluses recorded year in and year out. Regional economic groupings such as the Southern African Development Community (SADC), Common Market for East and Southern Africa (COMESA) and Economic Community for West African States (ECOWAS) to mention but a few, have relentlessly tried to foster trade but with minimal fruition. Trade is what drives global growth pulse, markets and determines currency trading as observed between United States (US) and China whose impasse has been a subject of contentious debate with tariff hikes on over $300 billion worth of Chinese goods slapped by the US. The trade surplus the US records with China has been a pain point for Trump hence the prolonged war that the entire world is feeling the heat for.
Our focus on this article will not be on the global trade but the untapped potential in Africa trade that has, for a long time been a puzzle that many institutions have grappled with. One of the few institutions that have taken the challenge of boosting trade are the Africa Development Bank (AfDB) with its President Akinwumi Adesina taking the trade agenda personal. AfDB in its last annual meeting in Johannesburg promoted fashion and apparel business including the first ever African Android phone dubbed Maraphone owned by Ashish Thakkar one of Africa’s billionaires.
Africa Export and Import Bank has just unveiled its digital solution to the continents trade gap using its portal dubbed the Mansa which is a due diligence compliance and visibility tool which will allow banks to screen African counterparties.
Just what is the Mansa tool exactly?
Named after the richest individual that lived in the history of the World. Mansa Musa lived in the 13th century and was Malian by origin. Musa owned gold and other commodities that have today been traced in modern day Egypt and most of West Africa. His wealth is said to be that of Bill Gates and Jeffrey Bezos put together. It is very vivid that trade was once of very massive expanse in Africa with commodities traded tracing as far as North Africa in Timbukutu to Southern Africa at the ingombe illede(sleeping cow) exchanges. Clearly there was an exchange of value which Africa would now like to revamp and modernize with the aim of achieving growth of nations as they grapple with fiscal deficits, currency weaknesses, untapped potentials and many economic challenges. It is believed that reverse trade between African nations will help make the continent self sustainable and grow the African GDP immensely.
The tool caters for both large corporates and small to medium sized businesses. So then how will a trader in Casablanca know that that Zambian emeralds from Lufwanyama are the best in the world? Or how will a Harare trader know that some entity in Oagadougou can supply camel skins? Mansa is a platform that will allow for uploading of verified data for business entities onto an Afrieximbank owned portal verified by African central banks and financial institutions to allow visibility of continental entities to facilitate trade. This is one part of the efforts that African institutions are trying to foster trade on addition to Continental Free Trade Agreements. Before the continent can get to free trade, there should surely be some form of visibility of the entities to trade, which is the role that Mansa will play.
The Mansa portal will also provide information on various investment opportunities that exist within African countries that those with trade appetite can leverage off.
A due diligence tool to plug the trust gap and lower transaction costs.
Suffice to say Mansa is a repository will provide the requisite compliance and due diligence checks on African counterparties required in continental trade to plug the trust gap which has hindered trade transactions. It will serve as a primary source of data for reference sake. With Mansa it becomes easier to foster usage of appropriate trade finance tools and lower the cost of transacting which is high in Africa on the back of lack of trust.
At what stage is the Mansa tool from roll out?
The Afrieximbank has courted all central banks in Africa who are expected to sign charters for familiarization of the tool in Africa. With the help of central banks, it is expected that their buy in will assist with the CDD process providing assurance to users of the tool on credibility of data. Access to data on the portal will be at a fee to be incurred by the entities looking to do business with fellow African nations.
The Afrieximbank in conjunction with the Egyptian Banking Institute has been running a series of sessions with commercial and central bankers from across the continent to familiarize them with the Mansa tool.
Mutisunge Zulu is an Economist and Finance Analyst with over 13 years experience in the field of financial, business and market risk management.