In the face of mounting global environmental challenges such as climate change, biodiversity loss, and pollution, and increasing focus on environmental, social and governance (ESG) awareness, sustainable trade practices and supply chains have the potential to radically transform Africa’s economic future.

From green logistics to fair trade and circular economy principles, sustainable trade practices have a significant positive impact on global and local trade. In addition to environmental benefits, they enhance market competitiveness and open access to new markets that value a commitment to sustainability.

However, the transition to eco-friendly and sustainable supply chains is reliant on several factors, not least a significant investment in the infrastructure and technology needed to streamline port and customs operations and ensure a smooth entry of goods into the country in question. An understanding of the importance of digital transformation by governments and regulatory bodies is also a key factor in adopting digital solutions over more traditional manual systems.

African countries that understand and embrace these requirements are well on their way to laying the groundwork for sustainable trade practices.

As an example, the port of Cotonou in the West African country of Benin handles an average of 80 to 90 merchant vessels monthly. According to the African Development Bank, Cotonou deals with 90 percent of the country’s international trade, serving up to 100 million consumers. In 2022, the port handled 12.5 million tonnes of goods, a figure that is predicted to almost double by 2038, reaching 23 million tonnes.

In a gesture of confidence, the recent extension of an €80 million loan by the African Development Bank for significant infrastructure upgrades will expand the port’s operations even further. Yet despite the vast and complicated operations of one of Africa’s busiest ports, Benin has jumped to 66th place on the World Bank’s Logistics Performance Index, an astonishing leap of approximately 100 places in just under a decade, positioning the country as West Africa’s key trade hub.

But this wasn’t always the case. High shipping costs, low efficiency, and poor logistical facilities threatened to stifle any hopes the port had of becoming a key trade route, despite the fact that the country is a crucial transit route for West Africa, connecting millions of people in the landlocked countries of Niger, Mali, Burkina Faso, Chad, and the northern regions of Nigeria.

Technology is revolutionising trade practices
The solution? Leveraging technology to break through the complexities, inefficiencies, and obstacles impeding effective trade, and transform Benin into an economically competitive trade hub.

This is a story that replicates itself in trade ports along Africa’s entire coastline. Operators and customs entities are constantly looking for ways in which to alleviate the backlogs and delays caused by the high volumes flowing through these trade entry points, and digitisation, along with improved physical infrastructure, is proving to be an extremely effective solution. Partnerships and collaborations with specialist service providers hold the key to success.

The Webb Fontaine and Benin story
Backtracking from the current situation, and highlighting the importance of long-term public-private collaborations in modernising and streamlining trade landscapes, Webb Fontaine started working with Benin’s Ministry of Finance and Benin Control in 2017. Implementing a suite of innovative solutions including Webb Single Window, Webb Transit Tracking, Webb Valuation, Webb Ports, and Webb Customs, we are proud to be playing a pivotal role in transforming trade in the country.

Webb Single Window has been a game changer. It forms the basis of GUCE Benin, a digital platform with over 6,500 users in the logistics chain that facilitates import, export, and transit operations, and incorporates electronic payment via Paylican, Webb Fontaine’s official payments partner. Webb Single Window has also automated the processing of key administrative operations like issuing licenses and authorisations, overseeing currency exchange operations, managing exemptions, and communicating with tax services.

In practical terms, this means streamlining the process needed to get containers out of the port. Digitising processes to create efficiencies, using new technologies such as artificial intelligence (AI), reduces the time spent on clearance of goods, for both customs brokers and administrators. Benin now ranks as West Africa’s top port and holds the third-highest rating in Africa behind Egypt and South Africa. Release times have been reduced by 30%, with a remarkable 50% of containers being released within only two days.

Along with operational efficiency at the ports themselves, economic growth is a key benefit. From digital skills development to higher revenues as a result of streamlined operations, technology is playing a crucial role. For example, reducing the clearance time from 47 days to only a few days allows for more cycles of importation, increasing tax revenue and creating a healthy economic cycle. This also attracts foreign direct investment, making the port more attractive for investors and traders.

However, the use of technology in port operations is just one aspect in a larger framework of sustainable trade. The resultant benefits, such as automated systems and data analytics have the potential to lead to more efficient operations, reduced emissions, and less waste, which are all key components of sustainable trade practices. For instance, quicker turnaround times not only reduce the carbon footprint of shipping and logistics operations, but they also reduce the need for extended storage, in turn decreasing energy consumption and waste.

Is Africa ready for sustainable and eco-friendly supply chains?
Despite the challenges faced by African countries, many are making great strides. Togo’s new container platform, Nigeria’s planned green port, Liberia’s green economy reforms – all are notable examples. Yet much still needs to be done to fully embrace the digital transformation journey, while at the same time addressing issues like infrastructure development.

All stakeholders have a role to play in implementing sustainable and eco-friendly trade practices and policies. African governments, for instance, can make a commitment to investing the funds and resources needed to create infrastructure that will support both trade and digital advancements, as well as support sustainability initiatives. The African Continental Free Trade Area can play a crucial role in developing a standardised approach to these issues, based on learnings from other countries on the continent.

Africa is a continent that has immense potential when it comes to creating and maintaining sustainable trade practices that will drive economic growth. The continent’s success stories demonstrate this, and serve as a call to governments, industry stakeholders, policymakers and the private sector to work together to find tangible solutions that will promote further growth and development. Webb Fontaine is already playing a crucial role in supporting Africa’s governments on their trade facilitation journeys, with specialised port technology that is securing customs revenue, mitigating trade fraud, and streamlining clearance times. In the same way, when all stakeholders collaborate and contribute to improvements in their respective areas, Africa’s economies will reap the collective rewards.

To read the article as it was published on the CIO Africa webpage, click here.

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The conclusion earlier this month of the Agreement on Climate Change, Trade and Sustainability (ACCTS) by New Zealand, Costa Rica, Switzerland and Iceland comes at a time when the world is experiencing record-high temperatures, spreading wildfires, and destructive floods and droughts. Despite these developments, WTO members have been unable to rally consensus to develop new trading rules to help halt these trends, highlighted by their recent failure to bring the second part of the fisheries subsidies agreement over the finish line.

The ACCTS reflects an emerging model for trade agreements — one that is limited in participants and sectors but can be concluded more quickly and without sacrificing ambition.

Instead of sitting around in endless discussions on what is the best way to incorporate climate change and sustainability concerns into trade agreements, these four small, trade-dependent countries moved into action and hammered out meaningful commitments. The agreement is an important step in elaborating on what is possible in this contested space. The parties hope that others will join over time, or even adopt similar rules in their own bilateral agreements, providing momentum for a broader multilateral agreement.

ACCTS has four key components. First, the four parties will eliminate tariffs on over 300 “environmental goods” upon entry into force. Although the list of goods has not yet been released, the members claim it is the most comprehensive and ambitious list of agreed-upon goods to date, including solar panels, wind turbines, electric vehicles, recycled paper and wood products offering a more environmentally sound alternative to carbon-intensive construction materials. It also includes criteria for qualifying as an environmental good so there can be ongoing updates. The tariff cuts will apply to all WTO members (not just the other parties), so as to be consistent with WTO rules.

Second, the parties went beyond goods commitments to also open up their service sectors. They agreed to new levels of market access in more than 100 sectors that make a “substantial contribution to addressing pressing environmental purposes.” However, which sectors these are, and the level of market access agreed upon, is yet to be made public.

Third, the agreement provides a new framework to prohibit and discipline harmful subsidies for fossil fuels, with limited exceptions.

Finally, the parties agreed on guidelines for voluntary eco-labeling programs, which should help provide consumers with more accurate information and avoid such labels in and of themselves becoming a barrier to trade. The inclusion of binding dispute settlement in the agreement also underscores the importance the countries attach to these commitments.

The ACCTS partners hope to sign the pact later this year, with the aim that it will enter into force in 2025. Once the text is released, other countries will then have the opportunity to study the obligations and determine their interest in joining. Norway participated in all 15 rounds of negotiation but said it needs more time to consider the final text to see whether it should sign up. Fiji had also been involved in the negotiations but dropped out of the talks early on, most likely due to capacity issues.

Regrettably, the U.S. is unlikely to sign — particularly given its aversion to further cutting tariffs, and especially given those tariff cuts would be expected to also apply to nonparties, including China. Curbing fossil fuel subsidies also has been a bridge too far for Washington, although a Democratic president in the White House next year may be more ambitious. There is little doubt that a Trump administration would firmly oppose such provisions.

Like others, China is expected to closely study the text once it is released. Even though Beijing may have concerns with some elements of the agreement, it may apply for membership, as it has recently done with the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA). By expressing interest, Beijing has little to lose. It can show it is committed to addressing climate change through WTO-consistent trade agreements while seeing whether the other parties would consider the necessary flexibilities for it to join.

While the two largest economies may be absent, ACCTS follows a model that New Zealand and other small and medium-size countries are increasingly relying on: a “let’s start small” approach toward trade agreements in which they focus on specific areas of interest, invite a small number of like-minded countries to join and over time expand the circle of participants and grow the commitments.

This approach, which has been successfully employed for CPTPP, DEPA and the Global Trade and Gender Arrangement, has become increasingly attractive, as deals in the WTO are hard to come by given its large and diversified membership.

ACCTS includes rules and market access commitments that may not be to Washington’s liking, but by not being at the table the U.S. continues to forfeit its role in shaping new trade and investment rules.

More of these mini trade deals among small groupings of trading partners are expected to be concluded in the months and years ahead. If this model drives the development of new norms in trade policy (as the parties hope), Washington should reconsider its stance of sitting on the sidelines and claim its seat at the negotiating table.

Wendy Cutler is vice president of the Asia Society Policy Institute and former acting deputy U.S. Trade Representative. Jane Mellsop is director of trade, investment and economic security at the Asia Society Policy Institute.

To read the full opinion as it was published on Nikkei Asia, click here.

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Businesses have been slow to fully embrace circularity for multiple reasons, not least economics. There is money to be made from circularity, but allocating margins fairly across fragmented value chains is difficult. As the biggest beasts in the value chain – with the greatest capital and capability ‒ there is a compelling responsibility on commodity-producing companies to take a lead. However, corporate targets today remain stubbornly focused on individual companies, rather than on measures that would enable the entire circular value chain to thrive.

Companies need to explore different ways of building relationships across industries for circularity to flourish. In this report, we focus on three key initiatives across different industries – electronics, plastics and biofuels ‒ where companies have come together in precisely this manner, pointing a way forward for other sectors too. Through joined-up thinking, a pathway to increased circularity remains open.

Stuck in a loop: barriers to progress

A circular value chain is only as strong as its weakest link. If one company has no incentive to participate, the whole value chain can break down. In established, commoditised markets (such as gasoline), value allocation is coordinated by the price signal. However, in nascent, pre-commoditised markets typical of circular value chains (such as biofuels), transparency is lacking, presenting commercial challenges to businesses trying to make progress on circularity, among them: 

• International oil companies (IOCs), technology companies and waste management firms all operate with different capital bases, risk appetites and cashflow needs, complicating expectations about what ‘fair value’ looks like. 

• Without a clear route to value, waste-processing companies and new technologies will not be induced to bring supply to the market.  

Moreover, there are operational challenges for companies adopting circular business models. For starters, new systems need to be put in place to track material flows and staff will need to be trained to act in ways that promote the value chain as a whole. Sales and procurement teams, for example, need to operate differently when success depends on the whole value chain rather than just their own business.  

These challenges, though, can be overcome as long as the system can generate sufficient cash. We see three broad circular product models where that can happen. 

First, products where supply from waste costs less than virgin production. These are typically markets with the highest rates of secondary material usage and the closest to commoditised markets. Collecting plastic bottles to make fibres is a good example, with a global recycling rate of 56%. 

Second, products where the cost of the processed waste supply is at a premium to virgin production. But that premium can be easily absorbed in the price paid by the end consumer because of the fractional impact of material cost on the price of the final product. 

Third, products that come at a cost premium that cannot be absorbed by the consumer. Fuels are the classic example. Here, the margin must be supported by policy ‒ usually through demand mandates – but this can be substantial. While a typical refinery could generate a net margin of 2-5%, the equivalent for renewable diesel, for instance, has been 20-35% in recent years. 

Leading the charge: the flagbearers of circular value chains

Fuelling the future through vertical integration

Biofuels – fuels derived from non-fossilised organic matter and its processed derivatives ‒ will play a key role in the journey to net zero, providing carbon-neutral molecules to power hard-to-abate transport sectors. Eni is a leading biofuel producer with ambitious plans to expand from 1.7 million tonnes per annum (mtpa) of biorefining capacity in 2023 to 5 mtpa by 2030, during which time global production is forecast to expand by one-third.

A key challenge to the growth of the sector comes from the need to secure reliable access to sustainable biofeedstocks, which are severely constrained. To derisk the availability of feedstocks in future, Eni has invested in vertical integration into the agricultural sector in Africa. Recognising that its capital and expertise could be used to benefit farmers in the region, Eni has helped source land that does not compete with food production and provides security of income to farmers through its long-term feedstock needs.

In return for this upfront capital investment, Eni will fulfil 20% of its feedstock needs, providing a material hedge against future volatility and boosting the market through ‘greenfield’ investment.

Adding value to value chains

What marks these three case studies as examples to emulate is not that they provide a template. Joint ventures are not ‘the solution’ to recycling, not all refiners should invest in farming and e-waste will require more than the CEP arrangement to drive circular outcomes in the future.

What they show is that adopting the right forms of value-chain relationship – driven by the needs of the company and the value chain – can serve to introduce coordination, laying the foundation for circular value chains to grow together.

Joined-up thinking: the path to promoting circular growth 

Increasing circularity has a key role to play in reducing emissions and building a sustainable global economy. However, the hype around circularity over the past decade has not resulted in a material switch.  

Companies have not been incentivised to elevate their target setting to the level of the value chain, because of the complexity of circular business models and the relatively small revenue streams they generate compared with those available in primary commodities today. Consequently, firms have set ineffectual targets, focused on their niche.  

To overcome the status quo and secure the potential of a more circular economy, they must: 

• Switch their target-setting approach: ambitious circularity targets act as a key catalyst for change within a value chain. However, to be effectual, the ambitions must flip from ‘what’ they want to achieve to ‘how’ they will bring about the value-chain transformation that will help them to deliver. Embracing this systemic thinking at the heart of corporate strategy is difficult and uncomfortable, but essential if progress is to be made.  

• Make the case for patient capital: with primary markets some orders of magnitude larger than those for waste products, and with new technologies and business models to scale, investing in the circular economy will almost inevitably dilute a company’s margin today. However, those companies that fail to act today risk finding themselves locked out of secondary markets in the future, with available supply secured by first movers. Companies should leverage the relatively small scale of these markets and the necessity of investment today to secure buy-in from owners. 

• Build relationships with brands: consumer brands are the other bookend of these markets, and far more directly exposed to consumer pressure. As the other pole in these markets with capital and capability to deploy, commodity producers should reach out across the often complex and lengthy value chains to work with these companies – be they in fast-moving consumer goods, transport or apparel – to build value-chain competence. 

It is undoubtedly true that firms need support in the journey towards greater circularity, with clear and consistent regulation to underpin demand for circular materials. Equity holders, too, need patience to support investments that can bring the revenue streams of the future to the fore. But much is in the gift of commodity producers. As demand for circularity increases, greater action is imperative. 

To read the white paper as it was published on the Wood Mackenzie webpage, click here.

To read the full PDF, click here.

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The theme of the conference will be “Deepen China-Africa Partnership and Promote Sustainable Development to Build a China-Africa Community with a Shared Future in the New Era”, according to Chinese foreign ministry spokesman Wang Wenbin.

Speaking in a press conference in Beijing on 5 November, he said that the meeting would “review and assess the follow-up implementation of the outcomes of the 2018 FOCAC Beijing Summit as well as the joint China-Africa response to Covid-19, and chart the course for China-Africa relations for the next three years and more to come.”

He also predicted that the forum would “inject new impetus into the China-Africa comprehensive strategic and cooperative partnership”.

Four key themes for the FOCAC agenda

On 8 November, Senegal’s foreign minister and the Chinese ambassador to Dakar, Xiao Han, announced that the forum would adopt four resolutions: The Dakar Action Plan (2022-2024); the 2035 Vision for China-Africa Cooperation; the Sino-African Declaration on Climate Change; and the Declaration of the Eighth Ministerial Conference of FOCAC.

These, predicted Eric Olander, writing on the China-Africa Project website, are likely to “serve as the main pillars” of the forum.

The Senegalese foreign minister said that the forum would appraise the results of China-African cooperation during the Covid-19 pandemic and define how it would continue for the next three years and beyond.

She also announced that the seventh China-Africa Business Conference would take place in parallel with FOCAC at the Diamniadio Exhibition Centre in Dakar and by video conference. The 2018 edition in Beijing hosted more than 1,000 African representatives from over 600 enterprises, business groups, and research institutions.

“FOCAC is our common good. Its success will bring prosperity to current and future generations of Africans and Chinese,” said Aïssata Tall Sall.

I’m a journalist and editor with a focus on business and world affairs stories. I’m currently the editor of African Business Magazine, the leading pan-African monthly publication based in London. I write informative and entertaining features on business and political developments in Africa and commission, manage and edit our in-house reporters and freelancers as they deliver breaking news and features. 

To read the full commentary by David Thomas in the African Business, please click here.

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