The private sector is an indispensable stakeholder in the African Continental Free Trade Agreement (AfCFTA) given its ability to catalyse sustainable economic development and job creation, experts has said.
The Economic Commission for Africa (ECA) estimates that by 2045 intra-African trade in agri-food, industry, and services sectors will increase by nearly 35% compared to a situation without the AfCFTA.
Speaking during the three-day Africa Prosperity Dialogues held last week, ECA director for Regional Integration and Trade Stephen Karingi (pictured) implored captains of trade and industry to “own and drive the implementation of the AfCFTA by supporting their governments but also by holding them to account.”
“Africa’s private sector accounts for 80% of total production, two-thirds of investment, and three-quarters of credit, and employs 90% of the working-age population,” Karingi said.
Experts say governments must implement the AfCFTA “fully and effectively” to drive intra-African trade.
UN Assistant Secretary-General and Director of UNDP’s Regional Bureau for Africa, Ahunna Eziakonwa, said it was through the AfCFTA that “we will industrialise” and create rather than “export African jobs”.
“An Africa that produces its people’s needs is not just the Africa we want, it is the Africa we need,” Eziakonwa said.
Karingi, however, noted that the African private sector of which 90% are small and medium enterprises face challenges in conducting cross-border trade due to non-tariff barriers such as complex customs procedures, lack of access to finance, high costs of transportation and logistics, and lack of access to information, among others.
He said the inadequate infrastructure connectivity, rudimentary productive capacity, and risky or expensive payment systems were some of the barriers to trade, adding “the cost of doing business across African borders remains high, leading to the regrettable situation where African products are uncompetitive in African markets”.
Africa’s weak productive capacity and consequent excessive reliance on imports for essential products expose the continent to external shocks such as the Covid-19 pandemic and the Russia-Ukraine war, Karingi said.
“When Covid-19 struck, African countries were confronted with a lack of access to basic medical supplies because Africa imports over 90% of its supplies. When the Russia-Ukraine crisis dawned, several African countries faced a crisis of food security because wheat and corn exports from Russia and Ukraine were suspended,” he said.
The AfCFTA is expected to integrate and consolidate Africa into a single US$2.7 trillion market by eliminating many of the barriers to trade present across the Continent. It provides the platform for Africa to diversify its economy and achieve resilience to natural and manmade shocks, including climate change.
Wamkele Mene, Secretary General of the AfCFTA Secretariat, posited that the ambition to integrate Africa dates back to the founding of the Organisation for African Unity (now the African Union). But the challenge now, he noted, is to “transform such ambition into action”, citing vaccine manufacturing in some African countries as one of the ways in which the continent is moving from ambition to action under the AfCFTA.
The AfCFTA, which came into force in January 2021, is touted as Africa’s Marshall Plan with a potential to lift 100m Africans out of poverty and contribute US$450bn to Africa’s GDP by 2035, according to a report by the World Bank.
To date, 54 African countries have signed the agreement while 44 have ratified, becoming State parties.