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
African Footwear Industry
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.
African designers, tailors, and entrepreneurs are leading the way in circular fashion skills and business models.
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.
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.
AME Cosmetics Market Segmentation
By Product Type
By End Users
By Demography
By Distribution Channels
Egyptian Cosmetics Industry Overview
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 F&B industry is the second largest in Egypt in terms of value added, and the largest in terms of industrial employment. It achieved an average growth rate of 20% during the five-year period from 2015 to 2020.
Driving growth has been a shift to increased production for domestic consumption and exports. Egyptian food processors and manufacturers are taking advantage of Egypt’s central location in the Middle East North Africa (MENA) region to increase exports to nearby regional markets.
The value of food industries and agricultural crops exports in 2020 amounted to about $5.720 Billion, which accounts for 22% of Egypt’s total exports. Top exported foods include beverage concentrates, frozen fruit, confectionery and processed cheese. Other exports gaining global market share include olives, dried onions and oranges.
Egyptian processed and manufactured food products are import-duty exempt in nearly all of the Arab and African export destinations.
The rapidly growing demand for food in Africa fueled by rising population and faster economic growth presents greater market and trade opportunities for domestic agriculture.
The value of Africa’s food market is expected to more than triple to $1 trillion by 2030 which would unlock enormous opportunities for farmers, food processors, and agribusinesses alike, particularly through domestic trade.
A successful expansion of intra-continental trade share from 10 to 52% by 2022, as expected by the African Union Commission, promises significant growth and food security for individual African countries.
Egypt has increased its interest in exporting to neighboring African countries. In 2018, trade exchange between Egypt and African countries increased by 23% to $6.9 billion, compared to $5.6 billion in 2017, and Egyptian exports to African countries increased by 26.9% to reach $4.7 billion in 2018, compared to $3.7 billion in 2017, according to CAMPAS.
The Egyptian Parliament has approved the law number 1/2017 establishing the National Food Safety Authority on Monday 2, January 2017. The Law was published in Official Gazette on January 10, 2017. NFSA is an open and independent authority to protect consumers’ health and consumers’ interests by ensuring that food consumed, distributed, marketed or produced in Egypt meets the highest standards of food safety and hygiene.
The Micro, Small, and Medium Enterprise Development Agency (MSMEDA) has launched a new initiative to support small projects affected by the coronavirus, especially industrial and labour-intensive sectors, through exceptional short-term loans, up to a year, to secure the necessary liquidity for operation expenses until the crisis is over.
Trella: is an online marketplace that connects shippers with carriers for freight transportation.
Wedel: is the provider of an app for booking of on-demand trucking services. It allows companies to request freight shipment and delivery services on-demand.
Flextock: Offers end-to-end e-commerce fulfillment solutions. The company offers storage & fulfillment solutions with a process tracking facility.
Pamojan: Cross-boarder B2B marketplace, connect local manufacture/suppliers to overseas merchant wholesalers, and to market and brand Egyptian products to raise the country’s export profile in the international markets.
EGYPT: Advanced Cargo Information (ACI)
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
How does it work?
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:
What is the benefit of ACI?
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.
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.