‘Conducive environment key for AfCFTA’

NDAMU SANDU

The African Continental Free Trade Area (AfCFTA) requires a favourable environment for trading to take place under Africa’s single market, experts have said, amid rising expectations of improved intra-African trade.

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.

Experts said that work is cut out for trade to thrive under Africa’s single market, the biggest trading bloc in the world with a population of over 1.3bn and combined GDP of $3.4 trillion.

Mikuriya Kunio, secretary general of the World Customs Organisation (WCO) said customs is a driving force for regional integration, which starts with the gradual reduction in tariffs.

He said there should be transparency and predictability for business in the uniform application of tariffs and the existence of customs-business partnerships.

“Customs should understand what is the need of business and how they can help business, how business could comply with the border procedures. There should be cooperation based on trust,” Kunio said at a TICAD8 side event held recently.

Kunio said there is a need for the harmonisation of border procedures and interoperability so that the “ICT systems speak to each other”.

The WCO is working with JICA to develop a pool of experts to ensure that African customs officials are well trained and then impart the knowledge to colleagues, he said

PRIORITY AREAS

Demitta Chinwude Gyang, senior advisor customs AfCFTA said priority should be given on women and youth in trade to have an inclusive approach. A protocol on women and youth in trade is being worked on, she said.

“We see an inclusive AfCFTA as the only AfCFTA that will work,” Gyang said.

She said the AfCFTA Secretariat has also prioritised regional value chains on automotive, pharmaceutical, agriculture and transport and logistics. Private sector engagement has also been prioritised, Gyang said. There is focus on value chain financing after the realisation that without trade finance “we will not achieve our goal”, she said.

Gyang said the Secretariat was working with a number of regional economic communities who are the building blocs. She said the Secretariat has worked on a framework for continuous collaboration with RECs such as trade facilitation.

“We need to synergise working for national, regional and continental. We have international partners where we spell out specific areas where we collaborate,” Gyang said.

“We see ourselves partnering with different organisations especially where they have expertise.”

AfCFTA Secretariat secretary general Wamkele Mene said e-commerce and digital technology are key in the rebuilding of African economies post-pandemic.

More digital trade means more jobs for the teeming, youthful African population, providing them with higher quality of life, which is the Africa we want, Mene said.

“And there are enormous opportunities in Africa’s e-commerce marketplace, where women and youth cross-border owned businesses can essentially tap into a consumer market that is expected to reach $2.5 trillion by 2030,” he said, adding the Secretariat is negotiating a Protocol on e-commerce to facilitate cross-border e-commerce transactions.

The protocol will establish the requisite regulatory environment, legal architecture or platform for trade across the continent to be further harnessed. We are committed to promote and harness the digital economy as an engine for Africa’s growth and development.

PARTNERSHIPS

AUDA–NEPAD chief executive officer Nardos Bekele-Thomas said her organisation embraces the imperative for supporting Africa’s industrialisation and intra-African trade with strong multi-sectoral linkages to domestic economies.

The potential economic contributions and job creation opportunities of the AfCFTA, requires Africa to produce, feed and grow local and regional supply chains, she said.

Within these supply chains, micro, small and medium sized enterprises (MSMEs), both in the formal and informal sectors, are critical drivers of economic growth and development in most African economies, and account for up to 90% of all businesses in Africa’s markets.

She said support for the integration and growth of African MSMEs was therefore critical and AUDA-NEPAD is working to implement initiatives that specifically improve productivity, value addition and competitiveness along the value chain.

Mene said leveraging the opportunities offered by the AfCFTA is key to facilitating business partnerships between Africa and business counterparts in partner countries.

“The Japanese private sector, for example, has significant potential in Africa.  However, investors need to change from seeing the continent as a market for sales but instead as a location for value addition and manufacturing,” Mene said.

Peter Benhur Nyeko, CEO Mandulis Energy said lowering the tax base for exports and goods imported on the continent was key to drive output. He said when costs come down; there could be assembly of Japanese vehicles in Africa.

Nyeko said there is an opportunity to invest in language to create a multi-lingual workforce.

He said there is a challenge of exchange rate risks.

“Is there a possibility of a Euro type for Africa in the future?”

Afreximbank has rolled out the Pan African Payment and Settlement System (PAPSS); a local currency platform that is set to save Africa US$5bn annually in transaction costs on cross border payments. PAPSS says it has signed on eight central banks, 7 switches and 45 commercial banks.

PRIVATE SECTOR IS KING

Bekele-Thomas said the private sector is key in the integration process and requires an enabling environment to thrive.

“To be effective, a strong and active private sector requires a conducive enabling environment to achieve the benefits of Africa’s industrialisation, market and trade aspirations,” she said.

Bekele-Thomas said the realisation of Africa’s free trade area would depend on the implementation of coordinated industrial policies.

This will enable African countries to produce quality goods and services to trade, and to drive transformative industrialisation that is focused on economic diversification, technological innovation and social and environmental sustainability, she said.

All but one of the 55 African countries have signed the AfCTA agreement and 43 have deposited instruments of ratification.

AfCFTA is touted as vehicle to grow intra-African and also boosts exports. Under deep integration, Africa’s exports to the rest of the world would go up by 32%   by 2035, and intra-African exports would more than double,  led by manufactured goods, according to a World Bank report, Making the Most of the African Continental Free Trade Area: Leveraging Trade and Foreign Direct Investments to Boost Growth and Poverty Reduction.

Experts say the single market is the way out for Africa which is still to recover from supply chain disruptions caused by the twin evils: the Covid-19 pandemic and the Russia-Ukraine war.