The implementation of the African Continental Free Trade Area (AfCFTA) could catalyse the development and growth of Africa, and help the continent recover from the economic impact of the ongoing COVID-19 Pandemic.
The Implementation of the African Continental Free Trade Area (AfCFTA) could catalyse the development and growth of Africa, and help the continent recover from the economic impact of the ongoing COVID-19 Pandemic.
Economists believe AfCFTA is an opportunity to plot, organise, strategise & mobilise African economies for growth that has suffered a major blow due to the Pandemic.
According to the United Nations Economic Commission for Africa (UNECA), Africa’s growth this year will drop from an initial estimate of 3.2 percent to between -2.8 percent and about zero percent due to COVID-19, a dire situation that could throw an extra 20 million people into poverty in a continent where almost 300 million cannot afford one meal a day.
African Continental Free Trade Area (AfCFTA) Offers Silver Lining in Crisis
The start of trading under AfCFTA, slated to begin on July 1, was postponed due to the pandemic. While some believe the scheme has suffered a setback, there is a silver lining in the crisis for Africa.
In a virtual panel held earlier this month to mark the inaugural Africa Integration Day, Vera Songwe, Executive Secretary of UNECA, said Africa can use AfCFTA as a powerful tool in accelerating regional and economic integration and prepare for uncertain times.
A top Ghanaian Official, familiar with AU’s processes towards the implementation of AfCFTA, told Xinhua that the AfCFTA negotiations are currently being held online to firm up preparations towards implementation.
Mama Keita, Director of UNECA’s Eastern Africa Regional Office, said the COVID-19 pandemic should be used as a game-changer. It should serve as a wake-up call underscoring the urgency to turn Africa’s structural vulnerabilities into opportunities.
Experts believe that the AfCFTA is the best stimulus for Africa to come out of the COVID-19 pandemic and the crisis is a great opportunity the continent should not waste, in particular using lessons learned for Africa’s future development.
Francis Kofi Korankye-Sakyi, CEO of CATIPs-Ghana, a Ghana-based independent policy and research organisation, argued that COVID-19 presents Africa with the needed engine to grow its economies when the global value chain is not favourable.
“Africa should take advantage of the pandemic to develop its regional value chain. With that, we can kick-start the intra-African trade, starting with essential supplies like medicals, pharmaceuticals, and food products for the larger African market, because there is a high demand for them,” he said and urged for a deliberate effort to create “green lanes” for these essential commodities.
A recently released report by The AfroChampions Initiative, a leading private sector partner of the AU, notes that Africa has the opportunity to accelerate e-commerce, digital economy and the Fourth Industrial Revolution.
Charles Onanaiju, director of the Center for China Studies in Nigeria, told that AfCFTA is a key achievement as it is the first time that African countries have found a consensus on the need to give practical expression to integration and Pan-Africanism.
“The strength of the free trade area is that we enjoy the economies of scale. Larger markets, larger production scale and the elimination of undue friction within the region. Individually, we are small markets but on a larger scale, we are huge. Africa could become a major trading bloc attracting investment,” he added.
New Opportunities for Sino-Africa Ties
Jeremy Stevens, the economist at South Africa based Standard Bank, observed that AfCFTA offers a medium to long-term opportunity for Africa to attract manufacturing business, especially from China.
“AfCFTA represents a dramatic change for the export of single commodities, which has been central to most African economies, providing an important opportunity to boost industrialization and competitiveness as well as intra-Africa trade,” he told Xinhua.
According to him, the success of AfCFTA will largely depend on its impact on regional integration, buttressing trade and developing nodes of growth.
Gedion Jalata, senior advisor to the UNDP South-South Cooperation and former consultant to UNECA-Capacity Development Division regarding AfCFTA, noted that the free trade will create good opportunities for Africa-China cooperation.
“The hard infrastructure spread in Africa is low, with countries like China that have ample experience in infrastructure building well-placed to help build road, rail, port and air infrastructures for African Countries.
A strong Africa will be a strong ally and good partner for China,” said Jalata, who is also the chief executive of Center of Excellence International Consult, a consulting firm based in Ethiopia’s capital Addis Ababa.
“For China and the rest of the world, AfCFTA means countries can penetrate Africa with their exports, entering through key hubs like South Africa, Egypt and Nigeria and to some extent Ethiopia, instead of interfacing with each African country directly.
That will reduce the transaction costs on their goods and services at the same time, giving them access to a very large African market,” he said.
According to the Analysts, China-Africa ties must, however, focus on industrialisation, job creation and technology transfer through investment in manufacturing industries, led by the private sector in a manner that supports African growth and development.
According to Onanaiju, China is Africa’s most vigorous trading partner, investor and is becoming a major stakeholder in the continent’s social stability and economy.
“Within the framework of the Forum on China-Africa Cooperation and the Belt and Road Initiative of which many African countries have become partners, I think we can begin to see a synergy to narrow the gap in our infrastructure deficit.
If we align the practical tangibles involved in the Belt & Road to the prospects of African Free Trade Area, you will see a very huge future ahead of us,” he said.
He noted that what is needed between Africa and China is policy engagement to bring about a practical result.
“Africa can take advantage of what China took about 40 years ago when they opened up to the world. We are in a position to do that. We could be the next workshop of the world with cooperation with China if we deepen our engagement with the Belt & Road, if we take advantage of the enormous trade between China and Africa,” said Onanaiju.