BUSINESS REPORTER
African heads of State and Government meet next month at an extraordinary session on industrialisation, economic diversification and the African Continental Free Trade Area (AfCFTA) amid limited industrialisation on the continent.
The industrialisation summit comes as Covid-19 pandemic and its attendant disruption of global supply chains brought to the fore the urgency and significance of driving industrialisation on the continent.
Albert Muchanga, commissioner for Economic Development, Trade, Industry and Mining at the African Union Commission, said outcome of the extra-ordinary assembly would give “a stronger political voice to our industrialisation agenda”.
“We need to fully implement it for several reasons. The first of which is that we have a ready market, the African Continental Free Trade Area.
In this market, demand for manufactured and agro-processed goods in 1.5 times more than the global average. The second of which is that endowments of minerals, water, water, land, and a young population are all there to support our industrialisation drive,” Muchanga said at a recent Tralac conference.
The November 20 to 25 summit—to be hosted by Nigerien capital Niamey—is the brainchild of the African Union Commission, regional economic communities and partners.
It will be held during the Africa Industrialisation Week 2022 under the theme, Industrialising Africa: Renewed commitment towards inclusive and sustainable industrialisation and Economic Diversification.
In a paper, the World Bank said a regional industrial policy in the context of the AfCFTA could bolster scale economies and complementarities to drive more production, processing, and higher-value exports from the region, and facilitate industrialisation through global value chains.
The UN Economic Commission for Africa estimates that the AfCFTA will boost intra-African trade by 52% this year.
Critics say Africa’s single market will not boost industrialisation if countries do not see industrialisation as a path as a potential path to sustainable economic growth.
AfCFTA Secretariat secretary general Wamkele Mene said industrialisation has to be at the heart of the AfCFTA.
“A long-term objective is what we must strive for in the implementation of the AfCFTA,” Mene said.
He said they have almost concluded negotiations under phase one—trade in goods, services and protocol on dispute settlement.
“We are almost at the point of conclusion in appointing an appellate body, which will start operating as part of the dispute settlement mechanism. We have reached 88.8% convergence on tariff lines, rules of origin for tariff lines which is a remarkable achievement and we are almost at the end point of negotiating some of the phase two issues—competition policy, intellectual property rights, investments,” Mene said.
“These three protocols will be ready and will be presented to the heads of States for their adoption on the 25th of November when they meet in special session focusing on the AfCFTA.”
The AU says industrialisation should be seen with strong multi-sectoral and multi-directional linkages to domestic economies would help African countries to achieve higher economic growth rates and economic diversification.
It said success in industrialisation would be at the core of Africa’s efforts to address key structural economic growth and development weaknesses and fragilities, laid bare by Covid-19.
The supply chain disruptions caused by the Covid-19 pandemic has escalated calls to develop strong regional and local/national value chains which are touted as a game-changer to build a resilient SMEs production capacity in the continent.
There has been low contribution of regional value chains on the continent, accounting for 2.7% of Africa’s total value chain participation in 2019, compared to 26.4% in Latin America and the Caribbean and 42.9% in developing Asia, according to a recent report, Africa’s Development Dynamics.
The AfCFTA, which came into force in January 2021, is touted as Africa’s Marshall Plan and will lift 100m Africans out of poverty and contribute US$450bn to Africa’s GDP by 2035, according to a report by the World Bank.
The AfCFTA is the biggest trading bloc in the world with a population of over 1.3bn and combined GDP of $3.4 trillion.
All but one of the 55 African countries has signed the AfCFTA agreement and 44 have deposited instruments of ratification.
