AfCFTA creates a new economic path for Africa—Secretary General

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Source: GITFIConline.com

Alexander Nyarko Yeboah

The Secretary General of the African Continental Free Trade Area (AfCFTA) says African countries must wean themselves from the control of western policies which have created a wrongful path for Africa’s economic development.

Mr. Wamkele Mene says, “…Africa continues to be trapped in a colonial economic model, which requires that we aggressively implement the AfCFTA as one of the tools for effecting a fundamental structural transformation of Africa’s economy. We have to take action now, to dismantle this colonial economic model.”

Mr. Mene made this call on Monday during the commissioning and handing over of the AfCFTA secretariat building by the Republic of Ghana to the African Union Commission (AUC) in Accra.

In lamenting the sad economic story Africa had to tell, Mr. Mene said, “The AfCFTA is therefore a critical response to Africa’s developmental challenges. It has the potential to enable Africa to significantly boost intra Africa trade and to improve economies of scale through an integrated market.”

He observed that AfCFTA could be a catalyst for industrial development, placing Africa on a path to exporting value-added products, improving the continent’s competitiveness both in its own markets and globally and sending a strong signal to the international investor community that Africa was open for business, “based on a single rule-book for trade and investment.”

Mr. Mene said AfCFTA signalled that Africa was open for business and mutually beneficial investment, which would create jobs and improve livelihoods, because Africa had a market of 1.2 billion people, had a combined GDP of US$3.4 trillion, and could boast of over 400 African companies that earn annual revenues of US$1 billion or more.

Mr. Mene added that African industries had the opportunity to double production to nearly $1 trillion within a decade with three-quarters of that growth coming from manufacturing to substitute third country imports and meet increasing local demand, and “through at least the first half of the decade, seven of the world’s 10 fastest-growing economies were in Africa.”

The AfCFTA Secretary General indicated that the Covid-19 crisis “has ravaged global economic activity, has severely disrupted trade and global supply chains, and… has had a negative effect on global public health. Africa should not despair and fall into despondency – from a trade perspective, we should see this crisis as an opportunity – through the AfCFTA we have an opportunity to reconfigure our supply chains, to reduce reliance on others and to expedite the establishment of regional value chains that will boost intra-Africa trade and secure Africa’s productive capacity for generations to come.”

Mr. Mene indicated that his outfit had already initiated and had promising engagements with three of the world’s largest automobile-manufacturers, with a view to the establishment of automobiles value chains across Africa, intending to extend this type of engagement to include other labour intensive sectors such as Agro-processing.

He observed that for the agreement to work effectively, substantial domestic policy reforms and alignment of national legislation with the AfCFTA shall be required in order to reduce barriers to intra-Africa trade.

The Secretary General said this would also mean that, “Transhipment of goods from third countries that are outside of the AfCFTA zone will be a significant risk. The AfCFTA Secretariat will work closely with customs authorities to ensure that through robust implementation of the AfCFTA rules of origin regime, the prevention of transhipment is an absolute priority. The AfCFTA must create jobs, it must not create job losses through transhipment of third country goods into the AfCFTA market.”

Mr. Mene informed that AfCFTA offered Africa an opportunity to confront the significant trade and economic development challenges of the continent, which was market fragmentation, smallness of national economies, over reliance on the export of primary commodities, and narrow export base caused by shallow manufacturing capacity. Others included slack of export specialisation, under-developed industrial regional value chains, and high regulatory and tariff barriers to intra-Africa trade amongst others.