Market integration is a process, says AfCFTA secretariat amid challenges
The Secretary-General of the African Continental Free Trade Area Secretariat, Wamkele Mene, has dismissed talks that the AfCFTA arrangement was being rushed, saying there is no trade agreement where all members were ready at the same time. Indeed, there have been concerns about countries’ readiness for the trade deal; many are yet to address issues bordering strategies and customs procedures.
Specifically, pre-existing nuances that are peculiar to African markets in terms of alignment with Western partners, language, visa restrictions, currency, insecurity, Customs Union, existing trade agreements in regions, dependence on commodity exports, infrastructure, low manufacturing activities among others, raise concerns about the expected progress from the AfCFTA market.
Similarly, with outstanding issue of Rules of Origin (RoO) dominating negotiations, the African Union (AU) has equally said the principle of reciprocity will define the exchange of tariff concessions between state parties under the AfCFTA.
With free movement of persons within the continent still a major challenge, there are also concerns about services that would be effectively rendered without harassment and intimidation among trade partners.
According to the Organised Private Sector, the AfCFTA serves as an avenue for local industries in Nigeria to penetrate new markets and establish strong cross-border supply chains with other African countries, even though it also poses new competitiveness risk for many firms especially for those in the real sector.
This is because, the AfCFTA single market eliminates tariffs on 90 per cent of goods produced on the continent, offering investors potential economies of scale; enabling them, in theory, to manufacture goods in one country and export them tariff-free to the whole continent, if the goods are not on the exclusive list of the destination country.
Speaking during a virtual press conference, Mene said countries like Ghana, Egypt and South Africa were in fact prepared with the required customs infrastructure to ensure commercially meaningful trading started.
He added that Ghana had on January 4, officially recognised the first consignment of goods to be exported under the AfCFTA, an event he says other countries would be replicating soon to mark the milestone.
“The most important point that I want to emphasize is that Africa is now trading under new rules, new preferences, because we want to build a single integrated market on the African continent. It may take some time before each of us sees the direct benefit. We are not going to be deterred by our critics who say they don’t see evidence that trading has actually started,” Mene said.
According to him, market integration is not an event but a process that takes time, pointing out that it took the European Union almost 60 years to achieve its current depth of integration.
“I have never heard of a trade agreement where all countries were ready on Day One; I don’t know it. Africa’s market integration would take some time but you have to start somewhere,” he said.
The continental trade deal was earlier scheduled to go start officially on July 1, last year but was postponed by six months due to the COVID-19 pandemic. The AfCFTA provides the opportunity for Africa to create the world’s largest free trade area, with the potential to unite more than 1.2 billion people, in a $2.5 trillion economic bloc and usher in a new era of development. It also has the potential to generate a range of benefits through supporting trade creation, structural transformation, productive employment and poverty reduction.
Only Eritrea out of the continent’s 55 countries is yet to sign the agreement which has already been ratified by 34-member states. Through its African Trade Policy Centre (ATPC), the Economic Commission for Africa (ECA), has been working with the African Union Commission (AUC), and member states to deepen Africa’s trade integration and effectively implement the agreement through policy advocacy and national strategy development.