The African Continental Free Trade Area (AfCFTA) agreement; which entered into force at the beginning of 2021, aims to boost intra-African trade and to accelerate economic development on the continent The AfCFTA will cover a market of 1.3 billion people and gross domestic product (GDP) valued at US$3.4 trillion, across the 55 member states of African Union. In terms of the number participating countries, the AfCFTA will be the world’s largest trade agreement since the foundation of the world trade organization.
The general objectives of the AfCFTA are to: Create a single market for goods, services, facilitated by movement of persons in order to deepen the economic integration of the African continent and in accordance with the Pan African Vision of “An integrated, prosperous and peaceful Africa” enshrined in Agenda 2063; * Create a liberalized market for goods and services through successive rounds of negotiations; * Contribute to the movement of capital and natural persons and facilitate investments building on the initiatives and developments in the State Parties and RECs; *Lay the foundation for the establishment of a Continental Customs Union at a later stage; * Promote and attain sustainable and inclusive socio-economic development, gender equality and structural transformation of the State Parties; * Enhance the competitiveness of the economies of State Parties within the continent and the global market; *Promote industrial development through diversification and regional value chain development, agricultural development and food security; and *Resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.
AfCFTA - Small and medium-sized enterprises; SMEs are key to growth in Africa. They account for around 80% of the region’s businesses. These business usually struggle to penetrate more advanced overseas markets, but in a consolidated continental market, they are well positioned to exploit scale economies, tap into continental export destinations and use the continental market as a stepping stone for expanding into overseas markets including through continental supply chains as well as global value chains.
AfCFTA - Women Population; Women are estimated to account for around 70% of informal cross-border traders in Africa. When engaged in such activity, women are particularly vulnerable to harassment, violence, and confiscation of goods. By reducing tariffs, the AfCFTA makes it more affordable for informal traders to operate through formal channels, which offer more protection. This can be further enhanced by simplified trading regimes for small traders, such as the simplified trade regime in the Common Market for Easters and southern Africa (COMESA), which provides a simplified clearing procedure alongside reduced import duties that provide particular help to small-scale traders.
According to World Bank’s analysis the AfCFTA will boost intercontinental exports by over 81% and exports with non-African countries by 19% by 2035. In terms of sectors, manufacturing exports are anticipated to make the most gains: a 110% increase for intra-African trade and 46% for non-African trade. In contrast, service trade is envisaged to have the most modest rise (14% of intra-African trade).
In the manufacturing sector; Europe and China are estimated to see the largest increase in trade with Africa. The removal of tariff barriers and non-tariff trade barriers across the AfCFTA member states facilitates sourcing within Africa to form a regional manufacturing cluster, which will in return attract more foreign investment to establish manufacturing activity in this region.
There is already an emerging tendency for foreign investment; in labor-intensive manufacturing sectors in Africa, for instance the textile industry in Ethiopia. China is a major investor in Africa's light manufacturing industry, especially textile and footwear. Some of the factories in this field with foreign investment are already sourcing a significant share from local suppliers and the AfCFTA will further add to this tendency. The growing labor force in this region will be another reason to see this trend increase.
Intra-AfCFTA exports to AfCFTA partners would rise especially fast for Cameroon, Egypt, Ghana, Morocco, and Tunisia, with exports doubling or tripling with respect to the baseline. Under the AfCFTA scenario, manufacturing exports would gain the most, 62 percent overall, with intra-Africa trade increasing by 110 percent and exports to the rest of the world rising by 46 percent. Smaller gains would be observed in agriculture—49 percent for intra-Africa trade and 10 percent for extra-Africa trade. The gains in the services trade are more modest—about 4 percent overall and 14 percent within Africa. Any
Footwear Industry Overview
The global footwear market is a multi-billion U.S. dollar industry. A part of the clothing and apparel industry, the footwear market is comprised of shoes, sneakers, luxury footwear, athletic footwear, and sporting shoes, as well as other related goods. Footwear products are commonly made of leather, textile, and a range of synthetic materials..
The global footwear market size was valued at $365.5 billion in 2020, and is estimated to reach $530.3 billion by 2027 with a CAGR of 5.5% from 2020 to 2027..
Footwear are made up of different materials such as leather, plastic, rubber, and fabric. Among these, leather is one of the most prominent materials used for fabricating footwear. Major players, such as Nike, use eco-friendly raw materials, including recycled car tires, recycled carpet padding, organic cotton and vegetable-dyed leathers for producing footwear.
Footwear Market Trends
It has been found that companies in the footwear market:are collaborating with chemical companies to innovate in material chemistries to include sustainable production materials. The idea of global innovation centers is grabbing the attention of brands that are bringing footwear professionals, manufacturers, and designers under one roof to co-create new generation footwear. Innovation centers are giving rise to immersive environments that help brands to drive footwear transformations..
Apart from the big names in the athletic shoe category such as, Nike, Adidas, and Puma, startups in the footwear market are leveraging value-grab opportunities. This is evident since the market is expected to surpass an astonishing revenue of US$ 1.7 Tn by 2030. The trend of Internet first footwear brands is a fast-growing phenomenon in the footwear market. Startups such as the U.S.-based Allbirds, New York-based Koio, and Tamara Mellon are gaining increased popularity. Several private label brands are scaling business opportunities through social media and eCommerce sales. The trend of vegan shoes and bags is catering to the niche requirements of buyers.
The trend of fast fashion has brought manufacturers in the footwear market under the scrutiny of regulatory authorities to lower their environmental footprint. Many individuals are becoming conscious of sustainable and renewable materials used in footwear. Several billion pairs of sneakers are made every year and several million of them end up in landfills. Hence, startups in the footwear market, such as Nothing New, are designing sneakers only made from recycled materials including post-consumer recycled plastic, rubber, fishing net, and cotton to lower the environmental footprint. As such, the global footwear market is anticipated to surpass the production of ~44,620 million units by the end of 2030.
African Footwear Market
For a long time, African leather has remained unappreciated, by the consumer despite a shift in consumer consciousness and pressure for greater transparency in every aspect of the fashion business. EU laws stipulate that the country of origin of finished goods is the country where the final production process occurs. This has enabled luxury fashion houses that source raw leather from Africa, and even begin the production process there, to tag their products as, for example, Made in Italy. This practice has helped European manufacturers to avoid using a Made in Africa tag, a process that has kept Made in Africa leather goods under the radar and struggling to build an image for quality and excellence, in Africa itself as much as abroad.
Although today’s biggest textile-producing countries, are China and India, “made in Africa” is gaining traction. Many brands are moving their production from Asian to African countries, with Ethiopia positioning itself as a leader in developing a textile industry in East Africa.
The demand for African designs, textiles, and garments,is increasing within and beyond the continent. Currently, in sub-Saharan Africa, the combined apparel and footwear market is estimated at USD 31 billion. The textile industry in Africa is estimated to grow at a CAGR (Compound Annual Growth Rate) of ~5% over the forecast period of 2019–2024..
The global market value of furniture; was estimated to be worth 509.8 billion U.S. dollars in 2020, and was forecast to reach about 650.7 billion U.S. dollars by 2027. The growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges.
The Middle East furniture market; in terms of revenue, will account for 5% of the global industry share by the end of the forecast time period. In fact, favorable initiatives by regional governments for increasing the FDI inflow in construction will further drive MEA furniture market revenues. Large hospitality industry projects are further contributing towards tourism growth across the region, which would drive the market growth in forthcoming years. Countries like South Africa, Egypt, UAE, and Saudi Arabia are some of the key contributors to the regional furniture market development.
The African furniture market on the other hand; Several African countries have good potential for developing their furniture industry, both for internal consumption and for exports. The more promising prospects are in South Africa, Egypt, Algeria, Morocco and Nigeria, but also Namibia, Tunisia, Kenya, Zimbabwe are possible candidates for a relevant expansion of their furniture production. Africa's rising economy, as well as its vast and quickly growing urban population, are some of the reasons why the furniture industry is doing well on the African continent.
The Egyptian furniture industry; is considered one of the most flourishing industrial sectors in Egypt that was able to increase its exports dramatically during the past decade. The furniture sector started to organize and develop its structure including factories, workshops, and labor force. Moreover the furniture sector is now giving more attention to the complementary and feeding industries to the furniture industry in order to increase the competitive of the furniture product.
The main production hubs in Egypt; (Cairo, Alexandria, and Damietta) are directly supported by infrastructure base (whether highways, fright rail lines, sea and air ports), making it an easy access to the international markets, with a strong advantage in the shipping costs and transit time.
Egypt's membership of COMESA regional economic bloc, and AfCFTA, along with its strategic location linking the Asia and EMEA, makes the country the gateway to the East and North African markets, with favorable trade agreements. This factor makes the country a significant exporters of furniture products.
Trends in the Furniture Industry in the MENA region; The expanding of real estate and hospitality industries represent the primary factors driving the global furniture market. Governments in the Middle East, especially Saudi Arabia’s government focus on the development of real estate through various residential and commercial projects that will ultimately help to foster their economy. Furthermore, high investment in tourism, healthcare, and education sectors has spurred proliferation of the construction industry in Saudi Arabia, which is subsequently expected to drive product demand from the country.
The business and office application; is predicted to capture more than 40% of the commercial furniture market share in 2027, led by persistent economic expansion that results in enhanced corporate earnings, for both business and leisure travel.
The wooden furniture market has the potential; to grow by USD 48.48 billion during 2021-2025, and the market’s growth momentum will accelerate at a CAGR of 2.75%. The home segment in the wooden furniture market is expected to continue dominating the market during the forecast period. In residential spaces, innovative styles and designs that occupy minimal space and offer maximum comfort are in high demand. Additionally, the demand for portable, wooden furniture is increasing due to the trend of shifting homes. This has further driven the growth of the wooden furniture market share.
The Global Cosmetics Manufacturing industry ; develops, designs, produces and markets not only personal care goods for everyday use, such as deodorant, shaving cream and dental floss, but also more specialty cosmetic products, such as tooth whitening strips, eyeliner and perfume. Since all of the industry's products are manufactured along a wide spectrum of quality and price options, the variability of these markets and products acts to somewhat cushion the industry from drastic changes in revenue. Further, demand for luxury discretionary cosmetics and beauty products that can be sold at higher price points has increased, thereby boosting profitability for many operators.
Total global sales in 2020 was ; a whopping $483 billion. With an annual growth rate of 4.75%, total revenue is expected to top $716 billion by 2025.- Skincare was the leading category, for about 42 percent of the global market. - Hair care products made up a further 22 percent, - Make-up accounted for 16 percent in 2020. - Skin care is one of the most profitable product category, as its revenue is projected to generate roughly 177 billion U.S. dollars in 2025.- As of 2020, Asia Pacific was the industry leader, accounting for approximately 43 percent of the global market.
Three Key Trends in Cosmetics Manufacturing;
Natural and Organic Cosmetics; The biggest sub-category of the clean beauty movement, natural and organic products, continues to see significant growth. A 2018 report projected the global organic personal care market to top $25 billion by 2025, more than doubling from $12.9 billion in 2017. More brands are looking to meet the standards set by the National Organic Program (NOP), and brands making “natural” claims face increasing pressure to provide full transparency and clear evidence for their claims.
Vegan Cosmetics; Amid the COVID-19 crisis, the global market for Vegan Cosmetics estimated at US$15.1 Billion in the year 2020, is projected to reach a revised size of US$20.6 Billion by 2026, growing at a CAGR of 5.1% over the analysis period. Skin Care, one of the segments analyzed in the report, is projected to record a 5.6% CAGR and reach US$7.8 Billion by the end of the analysis period. After a thorough analysis of the business implications of the pandemic and its induced economic crisis, growth in the Hair Care segment is readjusted to a revised 5.1% CAGR for the next 7-year period.
Cosmetic Good Manufacturing Practices (GMPs); relate to a set of comprehensive guidelines that help cosmetic businesses consistently manufacture products that are safe and of high quality. The word 'cosmetic' here refers to goods or materials intended to alter, enhance, cleanse, or groom one's face or body. They can range from makeup and fragrances to products such as soap, lip balms, shower gels, creams, lotions, body powders, and hair products. Apart from cosmetics, Good Manufacturing Practices also exist for other consumer products including food, drugs, and supplements.
Africa and Middle East Cosmetics Industry Overview;
Euro-monitor International valued; the beauty and personal care industry in the Middle East and Africa at about US$25.4 billion – with the market expected to grow by 6.4 percent yearly over the next four years during 2021-2025, making the Middle East and Africa the fastest-growing region in beauty and personal care products.
On 1 January 2021, free trading officially commenced; under the African Continental Free Trade Area (AfCFTA). The trade agreement will create the largest free trade area in the world measured by the number of countries participating. The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion.
Egyptian Cosmetics Market.
Egypt Exports of essential oils, perfumes, cosmetics, toiletries was US$571.66 Million during 2020, and expected to reach US $850 Million in 2026. Egypt's membership of COMESA regional economic bloc, and AfCFTA, along with its strategic location linking the Asia and EMEA, makes the country the gateway to the East and North African markets, with favorable trade agreements. This factor makes the country a significant importer and exporters of several products, such as food, beverages, cosmetics, and pharmaceuticals..
The advanced cargo information (ACI) service provides both public and private trade operators with comprehensive electronic cargo information well ahead of the arrival of the goods in the country of importation, to aid processing and clearance. www.nafeza.gov.eg
ACI provides real-time data to authorized parties in any location by means of a web-based application. This allows timely processing of import/export documentation as well as detailed monitoring of the traffic of imported/exported goods. ACI works as follows:
The New Egyptian Customs Law has been issued to promote foreign investment and facilitate the international trade between Egypt and other countries, through facilitating and unifying customs release operations and processes, streamlining customs procedures, as well as improving the customs tax refund process, which shall contribute to increasing the exports of Egyptian goods to international markets.
Key highlights of the law are as follows
Additionally, the new Customs Law has clarified the penalties on violators and smugglers, and introduces a revised post clearance audit process aimed at controlling the the import and export activity in an efficient manner, promoting faster release of goods at the borders, and protecting the country.
Good news if you’re looking to integrate your company into the global supply chain — a “reordering” of the system could open up new windows: More than a quarter of global product procurement could shift to new countries over the next five years, a new study by McKinsey Global Institute shows. Products worth up to USD 4.6 tn are at stake due to cost considerations and state pressure on manufacturers to become more self-reliant, the research arm of the global consulting firm said in a report. The findings highlight the pandemic-induced shift from long supply chains to “resilience and regionalization,” which were building [up even] before the pandemic hit, says the Financial Times.
The need for resilience: According to MGI’s report, companies can expect a major disruption to their supply chains every 3.7 years, leading to a loss of over 40% of a year’s worth of profits every decade. This is a result of trade tensions, cyber threats, and environmental risk subjecting businesses to “costly interruptions,” said MGI partner Susan Lund.
The take-home lesson: Diversify and keep it in your neighborhood. Companies need to have options and also bring their supply chains closer to home, Lund said. “You can invest in supply chain resilience and still come out ahead.”
Analysts are split on whether we’re going to see a reversal of globalization. Although Boston Consulting Grouprecently said that US-China trade could shrink by up to 15% from 2019 levels come 2023, S&P Global Ratings analysts say US companies may still be hesitant to lose access to the world’s second-largest economy (and largest manufacturing hub). Many in the US have, however, admitted that their supply chains are becoming overdrawn and complex, Lund said. On the flipside, markets sage Mohamed El Erian had said back in May that we’re entering an era of deglobalization, which will be driven largely by changing company behavior. Businesses will move away from relying on “just-in-time” models as resilience and sustainability become watchwords. That means they will begin localizing supply chains, and that also means there will be an increased intertwining of the public and private sectors in developed markets. Any thoughts??
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