adminSitshengisiwe Ndlovu
Trade & Technology
The AfCFTA becomes operational in January 2021. This is a huge milestone for not only Africa but the world at large. It is set to be the largest trade agreement after the WTO.
The World Bank has postulated that successful implementation of the AfCFTA will by 2035 uplift 30 million people out of extreme poverty and 60 million people out of moderate poverty.
While the AfCFTA has been critiqued as overly ambitious, empirical evidence on China and Singapore supports the AfCFTA outlaid trajectory. According to leading global economist Dambisa Moyo, China through trade moved 300 million Chines people out of extreme poverty within 10 years.
Singapore’s miracle economic growth has been globally manifesting a current account surplus of estimate 25 percent of GDP for the past 30 years in a row, as observed by researchers. Africa will through the AfCFTA accelerated industrialisation transform African economies into success stories.
The World Bank AfCFTA report estimates a relative growth of US$450 billion real income in Africa by 2035 with countries like Cote’ Devoire and Zimbabwe set to benefit more from the full implementation of the AfCFTA.
It is important to note that the success of the AfCFTA is not given as it will largely depend on the political will of State parties, the private sector, civil society and other stakeholders on designing context specific as well as complimentary measures to effectively implement the AfCFTA.
Moreover, it is also a given fact that trade liberalisation in the short term has negative effects on certain businesses especially the MSMES and women led businesses. Under the leadership of national Trade Ministries, the AfCFTA National Strategy Committee should adapt the AfCFTA Implementation Action Plan to reflect the dynamics of the obtaining macroeconomics environment as well as the country’s trade performance such that it will be possible to timeously intervene and mitigate the inherent negative effects of trade liberalisation.
The AfCFTA is premised on existing Economic Regional Communities, which according to research have struggled with implementation gaps. This has been attributed to lack of political will, institutional capacity and lack of dedicated funds. Furthermore, the spaghetti bowl effect may compound the implementation process where State Parties consider the AfCFTA as another addition to a layer of trade relations.
On the contrary, the existence of prior agreements presents State Parties the leverage of a certain degree of autonomy that will add value to the successful implementation of the AfCFTA. The Rules of Origin is a case in point. State Parties will be allowed to revert to the existing rules obtaining in the RECs should there be challenges on the new AfCFTA Rules of Origin.
Gleaning a leaf from the Singapore narration, their successful industrial development largely drew from the state interventionist policy that protected certain selected sectors while directing capital investment towards sectors that enhanced infrastructure and education to increase productivity.
Protocol on Trade in Services mandates State Parties to seek assistance from developmental partners so as to mobilise resources that will expand export capacity as well as enhance domestic activities of MSMEs. Nevertheless, through the Protocol on Trade in Goods, national governments are able to intervene through policy in identifying sectors that will comprise the 3 percent of excluded goods from tariff liberalisation.
Research within the Regional Economic Communities reveals that the voice of businesses remains muffled or absent in trade negotiations with a resultant disconnect that is detrimental to national economic growth. The state interventionist policy in the context of the AfCFTA will enlist private sector participation.
Through the various chambers and National Trade Facilitation Committees, the private sector should be able to identify bottle necks, perceive the AfCFTA as an opportunity to link with regional value chains that will offer local producers ease access to markets across Africa.
Private sector involvement will be greatly required in the formulation of standards within the AfCFTA. Standards are desirable for safety, health and environmental protection of the population of consumers. However, standards can easily become technical barriers to trade that impede seamless trade.
The African Organisation for Standardisation and Afreximbank have embarked on the mammoth task of harmonising standards that are fragmented all over Africa, as without this intervention, successful implementation of the AfCFTA may be a challenge.
Implementation of the AfCFTA will result in welfare loses and welfare gains. In some countries the slow uptake of the AfCFTA by the private sector has been attributed to the fear of unfair competition. Indeed trade liberalisation comes with opportunities of economies of scale, competitive advantage, and comparative advantage and in the process some businesses will close shop due to the creation of efficient markets because of the change in the business environment.
Transshipments, countervailing, and dumping activities will present constant threats however, the AfCFTA has the tools to combat unfair businesses practices that may cause injury to the domestic market. It will be possible to impose anti-dumping and countervailing measures on the offending goods should the need arise. An astute and informed private sector to point out to the Ministries of Trade any unfair trade practices will be desirable hence the need for the private sector, civic society and other stakeholders to thoroughly familiarise with the Africa Continent Free Trade Agreement and be active participants.
Furthermore, the AfCFTA Online Portal Non-Tariff Barriers Reporting Monitoring and Elimination in addition to the Africa Union Trade Observatory will give the traders mechanisms to report any unfair business practices while gathering free market intelligence to timeously assess the opportunities within the African markets.
As part of the first 23 countries that ratified the AfCFTA, Zimbabwe has to ensure that the AfCFTA works for the benefit of all businesses in the country including women owned businesses. While the success of the AfCFTA is not given, it is however, within the reach of every State Party through an all-inclusive implementation approach and other targeted complimentary strategies to make it successful.
It is now opportune therefore, for the AfCFTA national strategy to be visible and accessible to all stakeholders so as to design an effective roadmap towards a successful AfCFTA implementation.
Sitshengisiwe Ndlovu president of OWITZIMBABWE: 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. For more on trade matters visit her Blog on website: owitzimbabwe.org
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