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Ruth Butaumocho African Agenda
In March 2018, over 40 countries convened in Kigali, Rwanda, to sign the African Continental Free Trade Area agreement (AfCFTA).
With expectations that the agreement was going to cover all 55 countries with a combined GDP of US$2.2 trillion and strengthened trading prospects, one can imagine the euphoria that gripped the whole continent.
It means the continent was going to have a platform to trade on its own. This was going to be the largest free-trade platform in the world in terms of the number of participating countries since the formation of the World Trade Organisation.
Most countries were already pinning their hopes on AfCFTA for economic recovery and opening up of new frontiers. Looking at the framework under which AfCFTA was set up, it was clear that the agreement would present Africa’s best insurance policy and strategy to bolster trade and strengthen economic ties within.
More than a year after the signing of the agreement, the dream remains alive.
Although there has been a delayed start owing to the outbreak and the effects of Covid-19 that has ravaged the whole world, AfCFTA will roar to life on January 1, 2021.
Despite the delay of the trading date, the focus has not been lost. Preparations that are taking place in several countries in anticipation for the new date of trading attest to the member countries’ commitment to get the AfCFTA agenda back on track.
Initially pencilled to start trading on July 1, 2020, the date had to be postponed amid indications that the effects and the gravitas of Covid-19 was so severe and it would make it impossible to conduct any business.
The new date should present member countries — Zimbabwe included — with an opportunity to prepare adequately for trade. For once, Africa will have a grand platform where it would be able to trade within its borders, explore existing opportunities, look at challenges and be able to fine-tune its own trading platform without outside interference.
And true to the aspirations of the agreement, the benefits are immense.
If implemented properly, AfCFTA has the potential to generate substantial economic benefits for countries that are endowed with various natural resources.
These benefits include higher income arising from increased efficiency and productivity from improved resource allocation, higher cross-border investment flows, and technology transfers.
By creating a larger market and promoting specialisation, a continental free trade area could bring Africa closer together towards the common market the continent wants to see.
According to the Economic Commission for Africa, the implementation of the agreement is expected to increase intra-African trade by 52 percent, compared to 2010 levels by 2022
Apart from lowering import tariffs, to ensure these benefits, African countries will need to reduce other trade barriers by making more efficient their customs procedures, reducing their wide infrastructure gaps, and improving their business climate by removing the barriers that normally impede smooth trading, thereby hindering investors from doing business.
Currently a lot of African countries are not able to lure investors and trading partners because of high taxes and an unfavourable business environment where it takes longer than necessary to have papers processed. Corruption is also the biggest threat to doing business in some African countries.
With only a few months to go before AfCFTA kicks off, member countries will need to introspect and address key challenges that are likely to hinder their full participation in the continental trade area.
Like any other forum where people from diverse backgrounds meet, the AfCFTA is not going to be a walk in the park, but is set to be quite a competitive arena characterised by professionalism, good workmanship and proper business ethics.
Such a platform will require nothing but the best if nations are to compete with established regional trading blocs that are almost at par with developed countries.
A number of African countries already lay claim to various business section such as vehicle components, clothing and footwear, where they have already proved to be a force to reckon with.
What it means is, member states that require to trade in those areas, would need to up their game to ensure that their goods can meet the required standards.
While the Covid-19 pandemic presented many challenges to different countries, straining health systems and resulting in thousands of death, it also spawned a new level of sustenance and entrepreneurship, as nations sought to fill up the import gap.
With borders closed resulting in the shortage of personal protective clothing and other medical accessories, countries in Africa and elsewhere immediately embarked on manufacturing of protective clothing, sanitising accessories and medication to meet their needs.
Even local universities that for long had been accused of churning our graduates who are only good in theory, turned into industrial hubs, manufacturing ventilators, protective clothing and other accessories.
Such level of innovation is what the member countries now need to develop to ensure that their products and services can compete with established economies come January 2021 and beyond.
But of course, not all member countries are likely to hit the ground running on the same level because of social and economic challenges.
Some of the problems include lack of necessary structures, policies, human and capital resources to be compliant.
A country which has weak e-commerce policies and supporting structure might actually find it difficult to be part of the continental trade agreement.
It is therefore prudent for AfCFTA to come up with policies and ad hoc measures to support specific country needs to ensure that it becomes inclusive and mutually beneficially to all.
Online Reporter