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As Africa’s manufacturers await liberalised market for free trade

By Femi Adekoya
25 January 2023   |   4:06 am
Since 2020, the COVID-19 pandemic has become the key alibi for inaction of many governments in addressing key economic and developmental issues.

Minister of Industry Trade and Investment, Niyi Adebayo

Notwithstanding the trade restrictions among African countries, the African Continental Free Trade Area (AfCFTA), so far indicates a large amount of optimism but a far more realistic pace towards the goal. To the Pan-African Manufacturers Association (PAMA), addressing negotiations on schedule of tariff offers, finalisation of work on Rules of Origin, full operationalisation of the Pan African Payment Platform, among others remain key for a liberalised market. FEMI ADEKOYA writes.

Since 2020, the COVID-19 pandemic has become the key alibi for inaction of many governments in addressing key economic and developmental issues.

Though the pandemic impacted the integration goals of the AfCFTA, stakeholders believe that the lethargic reactions of African leaders towards opening up their borders and liberalising trade leaves much to be desired.

Indeed, three major issues are believed to be affecting the AfCFTA in its initial phase. First, the negotiation on the Rules of Origin seems endless. Several members were unwilling to ratify all the articles of agreement. Many African countries earn most of their trade revenue from exports to non-African countries. They were persuaded that the regional and domestic trade expansion could compensate for that. Certainly, the impact of the pandemic made countries focus on strengthening existing trade mechanisms to generate more revenue.

In 2022, rules of origin were resolved for 87.7 per cent of the goods covered by AfCFTA, including about 3,800 tariff lines.

Secondly, the AfCFTA suffers as does the African Union (AU) in general, from a lack of popular perception about its advantages across the board. African businesses in particular are not fully aware about the advantages of the AfCFTA.

Protectionist policies followed by African countries have taken time to reduce. Moreover, persuading them about the advantages of the AfCFTA and refocusing from exports to Europe for instance, to their neighbours, have taken much more time than anticipated.

According to a study by the Centre for the Study of Economies of Africa in Nigeria, one of the more anxious large economies in Africa, more than 60 per cent of Nigeria’s entrepreneurs were unaware of the AfCFTA and its benefits. Greater investment in making businesses aware of the advantages of the AfCFTA is required, as pointed out by the Africa CEO Trade Report 2022.

Thirdly, customs infrastructure to implement the AfCFTA obligations are slow. A few countries have the infrastructure and systemic capabilities for trade facilitation as required by the AfCFTA indicators.

To address some of the challenges, members of the private sector in Africa have called for the completion of negotiations on schedule of tariff offers, finalisation of work on Rules of Origin, full operationalisation of the Pan African Payment Platform and the speedy resolution of all outstanding issues germane to the effective implementation of AfCFTA.

They made the call at the Lighting of the Africa Trade Torch for the implementation of AfCFTA, held in Zambia and other member state countries simultaneously.

The President of Pan-African Manufacturers Association (PAMA), Francis Meshioye, called for support for the AU and AfCFTA Secretariat in the quest to evolve strategic approaches that will ensure trading in the AfCFTA corridor stimulate inclusive development in Africa through a strategic framework.

The framework is expected to facilitate inflow of investment into the continent, ensure upscaling of trade in manufactured goods through improved industrial capacity, as well as inclusion of women, youth, innovation and technology development in the implementation roadmap.

Meshioye

Others include addressing macroeconomic environment, poor competitiveness and dearth of trade facilitation infrastructure prevailing in many African countries, deliberate development of industrial inputs to reduce the intensity of reliance on the global supply chain, intentionally bringing down all the historical physical borders in Africa, facilitating peaceful co-existence and security of life and property, as well as effective support for all organised private sector organisations in Africa.

He said the private sector plays a critical role in transforming trade in Africa, even as he affirmed their commitment to the seamless operationalisation of AfCFTA.

Meshioye said AfCFTA is the largest single market in the world with a Gross Domestic Product (GDP) of over $2.6 trillion and is estimated to boost Africa’s export by more than $600 billion with wage gain of more than 10 per cent.

Meshioye said this presents a unique opportunity for increased production capacities and trade volume, as well as creating enduring wealth for the continent for significant reduction in poverty.

He said the single liberalised market for free trade in goods and services under AfCFTA offers a lifetime opportunity for African countries to trade more with each other and refocus national economic as well as investment and industrial policies to be in sync with continental aspirations to enhance private sector development.

Meshioye said it will also grow national economies, increase the number of African multinational companies and fast-track the process of fully integrating the continent into the global market.

PAMA, sees the “Single Liberalised Market for Free Trade in Goods and Services”, which AfCFTA offers, as a lifetime opportunity for African countries to trade more with each other, refocus national economic, investment and industrial policies to be in sync with continental aspirations to enhance private sector development, grow national economies, increase the number of African multinational companies and fast track the process of fully integrating the continent into the global market.

To some stakeholders, the manufacturing sector needs a fillip as that will benefit more from the AfCFTA. This also requires skilling. The logistics need upgrading to facilitate trade and this requires huge funding.

There are several stakeholders in cross-border trade: shippers, transporters, drivers, banks, ports, border officials, customs inspectors, and tax authorities. They operate individually, with little centralisation and restricted view of an item’s total value chain and transportation and storage. The economy requires easier trade movement across countries through tariff reductions, standardisation of the logistics industry, and infrastructure projects necessitated by the increased freight requirements.

Also speaking, the President, Africa Business Council Dr. Amany Asfour, said African countries must work closely to realise AfCFTA to boost economies of the continent.

She said the council is looking forward to the integration of Africa to ensure its economies grow despite the challenges in the continent.

Asfour said the Africa trade torch lighting kicks off the implementation of AfCFTA, adding that manufacturing and industrialisation are critical to the realisation of the trade agreement.

She also called on institutions across the continent to fully support the African private sector, as they are critical to the successful operation of AfCFTA.

Representative of the Africa Youths Entrepreneur from Chad, Idris Adoum Idriss, commended the event, noting that the initiative is very important for youth entrepreneurs in the continent, as they contribute largely to the growth of the economy.