Impact of Covid-I9 on international trade

Sitshengisiwe Ndlovu
COVID-19 is a global pandemic that has killed over 200 000 people, more than the World War II as observed by the UN Secretary General Antonio Gueterres.

The IMF has summed the pandemic’s economic effects as the Great Lockdown that far exceeds effects of the 1930s Great Depression. Domestic and international trade has stalled save for trade in pharmaceuticals, protective equipment and other life-saving essentials as countries have closed their borders in an effort to contain the spread of the coronavirus.

Stalling operationalisation of the African Continental Free Trade Agreement may be one of the major casualties of Covid-19 as discussions to postpone AfCFTA to January 2021 gain momentum. The rationale behind stalling AfCFTA in the face of the marauding Covid-19 is grudgingly acceptable as it sadly means delaying the onset of Africa’s industrialisation.

AfCFTA is premised on the success associated with trade liberalisation which is also linked to trade facilitation. While in the short term, Micro Small Medium Enterprises (MSMEs) and women businesses may not benefit from trade liberalisation, it is in the long term that the country experiences welfare gains. This will be evident in growth of MSMEs, increased competition, economies of scale, reduced trade barriers, total growth of the economy, employment creation and positive flows to the fiscus.

Women-owned businesses and MSMEs account for almost 70 percent of informal cross border trade.
Women have been disproportionately affected by Covid-19 due to the multiple roles they play in the economy as workers, traders, tax payers and consumers. As cross border traders, women contribute significantly to food security which has come under serious threat due Covid-19.

One of the protocols of AfCFTA is the Protocol of Free Movement of People although it is not an integral part of the agreement.

Twenty-two countries have signed this protocol and only four countries have ratified it.
Free movement of people across borders enhances this economic activity which is mostly undertaken by women.

The fact that only four countries have ratified the protocol reflects the state of preparedness of countries to make the AfCFTA work.

Furthermore 30 countries have ratified the Protocol of Trade in Goods and services while 24 countries are still to ratify the agreement.

The delay of the onset of AfCFTA due to Covid-19 may further compound the state of preparedness of countries which are still to regularise in the context of AfCFTA.

The economic volatility caused by Covid-19 is likely to be around for a foreseeable future.
Countries may have to view Covid-19 as a continuum which require continuous formulation of strategies based on multilateralism as opposed to protectionism.

Furthermore AfCFTA has been built on existing FTAs that are obtaining in the Regional Economic Communities — observing the acqui principle, such that putting ice on it is neither here nor there due to existing FTAs that are functioning currently.

What African countries urgently need is the protection of MSMEs and private businesses that face the brunt of Covid-19.

The disease must not be allowed to extinguish trade which is the engine of economic growth in Africa.
It is heartening to note that the AU Chairperson Cyril Ramaphosa, World Bank and IMF have been vocal in calling for the suspension of debt interest payments as a way of alleviating the economic stress felt by African economies.

Moreover AfCFTA national strategies that are inclusive of flanking policies may be employed to ensure smooth implementation of AfCFTA especially during this Covid-19 period.

Through Statutory Instrument 88 of 2020 the Government of Zimbabwe has granted a rebate of customs duties to facilitate smooth importation of essential medical supplies including protective clothing desperately required to fight Covid-19.

While lessons on Covid-19 cannot be extrapolated due to the heterogeneity of the African countries, what Zimbabwe has done may be adopted by other countries with modifications, and actually be launched by AfCFTA instead of a full launch on July 1, 2020.

This is because Africa’s demographic dividend lies in her youthful population that represents US$2,5 trillion markets and the potential middle class that will be created.

Research has revealed that “coronavirus somewhere is coronavirus everywhere”. In the short run, countries may fight the coronavirus through national strategies but in the long run international co-operation among countries may become a significant survival strategy.

In Africa, deeper integration with a renewed focus on health is desired.
The Africa Centre for Disease Control Centre should be strengthened as an institution that is autonomous and well resourced.

Postponing the onset of AfCFTA while sad, it reflects a complex phase where the world has to reposition itself so as to usher in a New Order as the world is certainly not going back to conduct business in ways it used to.

Simply put, in the context of business, it means while business has not changed, the way we conducted business has morphed into something totally new.

The silver lining amid the gloom of postponing AfCFTA is that the waiting period may be used to position countries to embrace the new way of doing businesses and fine tune the faltering businesses battered by Covid-19.

Currently AfCFTA Member States have been lackadaisical in the uptake of the digital economy.
Social distancing and lockdown strategies have given rise to the digital economy and e-commerce — a strong signal of departure from traditional business.

In view of the foregoing, Zimbabwe stands to gain through AfCFTA, so do the rest of African countries. AfCFTA provides safeguard measures for countries to protect themselves in the unlikely impact of welfare losses.

The exclusionary and sensitive tariff lists are there as provisions to protect vulnerable groups. It therefore becomes important to enlist women and youth in the design of implementation processes of AfCFTA with the private sector as the champions.

Trade is a powerful engine for growth and the AfCFTA is the vehicle and game changer that will see African economies grow through regional integration. Covid-19 should not be allowed to derail the AfCFTA initiative, instead the countries of Africa must perceive opportunity to regroup and promote trade among the AU Member States.

Sitshengisiwe Ndlovu: MBA/UNCTAD: Trade and Gender Linkages/ IAC Dip/Cert: Trade in Services and SDGs: Robert Schuman Center of Advanced Studies/IDEPCert: Making the African Continental Free Trade Agreement Work. She writes in her personal capacity.

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