AfCFTA offers opportunity to synergise economic links
On May 25 2012, the former secretary-general of the United Nations Ban Ki-moon, said: “Africa Day provides an opportunity to acknowledge the achievements of the people and governments of Africa”.
Looking at the trajectory of Africa that has been characterised by colonialism, racism, unequal trade relations between the continent and developed nations and success stories in equal measure, Africans have every reason to celebrate.
The celebration of Africa Day gives them an opportunity to remember the great historical achievements of the Pan-Africanist and founding fathers of the continental organisation.
Such celebrations also afford the continent an opportunity to define and map its own trajectory regarding Africa’s development, peace and security.
Africa continues to maintain its resolve to ensure peace and security, save for the growing problem of insurgency in some countries, with latest one raging in Cabo Delgado in Mozambique, where 2 500 people have since died, while 700 000 have been left homeless since 2017.
Currently there are ongoing efforts within the SADC region to ensure that peace returns to Mozambique, while similar concerted efforts are being made in the eastern and Horn of Africa to rein in ISIS activities.
However, despite the shadow insurgency has cast over the continent, Africa has every reason to celebrate following the strides it has made in empowering its people through the formation and the subsequent launch of the African Continental Free Trade Area (AfCFTA).
This grand platform now allows Africans to trade within its borders, explore existing opportunities, review challenges and be able to fine-tune its own trading platform without outside interference.
And true to the aspirations of the agreement, the benefits will be immense. If implemented properly, AfCFTA has the potential to generate substantial economic benefits for countries that are endowed with various natural resources.
Some of the envisaged benefits include higher incomes arising from increased efficiency and productivity from improved resource allocation, increased cross-border investment flows, and transfer of technology among participating nations.
By creating a larger market and promoting specialisation, a continental free trade area is already bringing Africa closer together towards the common market the continent wants to see.
According to the Economic Commission for Africa, the implementation of the agreement is expected to increase intra-African trade by 52 percent, compared to 2010 levels by 2022.
Apart from lowering import tariffs, to ensure these benefits, African countries will need to reduce other trade barriers by improving customs procedures, reduce infrastructure gaps, and improve their business climate by ensuring ease of doing business. With an anticipated economic boon following the operationalisation of the African Continental Free Trade Area (AfCFTA), the continent stands in a better position to lobby for an increase in its world trade share since it can now do so as one single unit.
Before the launch of this grand platform, Africa was not able to successfully lobby for increased trade owing to its fragmented trading policies, that could not be synchronised into one formidable platform, hence the formation of AfCFTA.
Through AfCFTA and the presence of an African leader at the WTO who understands the economic challenges and prospects for growth of the continent, Africa will now be able to take charge of its economic future since its now in a possession of enabling factors to fully participate in global economic matters.
It has been more than 100 days since its launch on January 1, and the progress made to date is pleasing. The progress points to a positive economic boon for the continent.
Exactly four days after the AfCFTA launch, two companies from Ghana became pioneer exporters of products using the AfCFTA preferences, marking a major milestone in the short, but eventful history of the trade pact.
Ghana’s alcoholic product manufacturers Kasapreko airfreighted a container-load of goods to South Africa, while Ghandour Cosmetics shipped items to Guinea.
More economic developments continue to dominate following the realisation by the continental leaders that they need to utilise their youthful demography, an avalanche of resources and their will power to economically empower Africa citizenry.
That continental approach has since cascaded to individual member countries, who are working on various developmental projects, which speaks to their own people’s aspirations and also feed into the expectations of the AfCTA.
In Zimbabwe, the Government is working on improving the economy following the launch of the National Development Strategy (NDS1).
The NDS1 is a vehicle aimed at achieving sustainable economic development namely, macroeconomic stability and financial re-engagement, inclusive growth, governance, infrastructure and utilities.
Once all these individual members states’ economic projects are consolidated, the implementation of the AfCFTA, should eradicate poverty because of its immense benefit to the members states.
The secretary-general of the Accra-based AfCFTA Secretariat, Wamkele Mene, emphasised throughout these past 100 days — and before then — that effective implementation of the trade pact is the post-pandemic stimulus Africa needs.
“There is not a single African country that can work alone to trade its way out of poverty,” he opined at an event in New York last month.
While there are still several countries that are still sitting on the fence, and have not yet committed to this grand trading platform, they stand to lose out because the benefits of the African Continental Free Trade Area are immense.
Once it begins to run at full throttle, the initiative brings together a potential market of more than a billion people and has a lofty ambition of increasing intra-African trade to 30 percent from a mere 20 percent in the next few years, by attracting investment into manufacturing, agriculture and other sectors and building regional value chains.
Other continents are already seeing opportunities, and are working together so that they can form partnerships and secure business opportunities in the long run after it emerged that they risk being left out once African nations begin to trade among themselves.
According to the United Nations Conference on Trade and Development, trade within Africa is of better quality than its trade with the rest of the world.
The centre confirmed that the former has higher manufacturing (46,3 percent), and medium- and high-technology content (27,1 percent) as well as more product diversity than the latter.
Resultantly, the free trade area can help African countries transform by expanding domestic productive capacity, enabling them to move up the value chain and diversify local and export production.
In addition, the platform is also going to improve the lives of women, whose numerical significance in Africa is too huge to ignore.
A study done by the UN Women East and Southern Africa noted that under the free trade area, women in informal cross-border trade, will have greater opportunities due to the tariff reductions promised under the protocol on trade in goods.
The study noted that those in agriculture value chains will gain a comparative advantage by leveraging AfCFTA’s protocol on rules of origin which permits access to cheap raw materials.
And by increasing their participation in public procurement at the national level, and cascading the same modus operandi , women will realise increased revenue gains and be better positioned to play a larger role in AfCFTA intra-regional trade opportunities.
However, it is important to note that despite the hype around AfCFTA, its success will depend on political goodwill of member countries and hunger from economic players to produce goods and services of a high quality.
Patience is also critical in the growth of the free trade area, because it not an event, but a long, slow and complex process that will take years to gain traction, given the scale of problems on the ground that may undermine its progress and potential.
These include, but are not limited to infrastructural challenges, rigidness in tax regimes, low production of goods and use of antiquated machinery for enhanced and quality production.
Be it as it may, the launch of AfCFTA, gives every African a reason to celebrate the Africa Day, because the free trade area has undoubtedly created a framework for economic change and boon in business.