What is AfCFTA?
The African Continental Free Trade Area (AfCFTA) was founded in 2018. It was created by the African Continental Free Trade Agreement among 54 of the 55 African Union nations. The free trade area is the largest in the world in terms of the number of participating countries since the formation of the World Trade Organization. The agreement initially requires members to remove tariffs from 90% of goods, allowing free access to commodities, goods, and services across the continent.
AfCFTA seeks to encourage cooperation among member countries to secure opportunities on investments, intellectual property rights, and competition policy. As a result, manufacture a single market giving Africa a globally competitive advantage.
A unified economic growth will ensue creating a sustainable approach in strengthening intra-African Trade. The AfCFTA agenda has the potential to increase intra-African trade by 52.3% by 2022 according to A New Horizon For Trade in Africa.
Through AfCFTA, African nations stand an added advantage to implement critical tactics towards its trading issues. Well executed, the following objectives will initiate deep reforms necessary to enhance intra-African trade:
- Increase in production and consumption of locally produced goods and services opening access to realize a single market and deepening the economic integration of the continent.
- Improve agricultural productivity by heightening quantity of output produced. In the long- term productivity growth will be led by improvement in farmers' production efficiency and technological progress.
- Address chronic food insecurity by paying attention to the four pillars of food security: food availability, access to food, utilization and stability.
- The manufacturing sector will increase its scope and size easing access to markets. It will aid movement of capital and people, facilitating investments.
- SMEs, youth, women and disabled will stand to benefit through available opportunities. An achieved sustainable and inclusive socio-economic development will result to gender equality and structural transformations within member states.
- An enhancement in competitiveness of member states within Africa and the global market shall strengthen Kenya’s pursuit of the national growth agenda.
AfCFTA: COVID-19 as a catalyst for Accelerating Trade and Investment in Africa
AfCFTA commenced at a time when countries all over Africa are preparing to reopen their borders and economies. This global pandemic has witnessed a backdrop of a record GDP per capita contraction. As a result, foreign Investor uncertainty is affected by escalating economic tremors. Ultimately, they opt out carrying with them 700bn worth of the continent’s investments. (Global Outlook on Financing for Sustainable Development 2021)
The novel coronavirus is straining Africa’s main operational systems and general livelihoods as well as the continents public and private sector amid lockdowns and stifling sources of income.
The international Monetary Fund (IMF) has revised its GDP growth forecast for the continent from 5.1% before the pandemic to -1.6%. Similarly, the world bank has forecasted a similar decline from 2.4% in 2019 to between -2.1 and -5.1 in 2020. On one hand mortality from the pandemic has been very low compared to other nations, but the economic impact will be enormous. These reports signal the first recession in the region over the past 25years.
That mentioned, there is ample opportunity to speed up economic recovery. An increase in intra-African trade can ease the burden created by the pandemic. This becomes increasingly important as restricted global trade in vital goods such as pharmaceuticals and food products become essential with the fight against COVID-19.
Retool the AfCFTA for COVID-19
African nations should use the AfCFTA innovatively to focus on central issues required to fight the pandemic. Some countries have initiated a mental parading shift to remain innovative. For instance, some factories hit by the drop in production have resulted to manufacture protective equipment. In Ghana, a liquor manufacturing company switched production to make hand sanitizer. Serval other nations have cultured such innovations to generate home-grown goods.
In Ghana, technology was leveraged to have drones deliver test samples faster to reach research centers. Aware this is the inception of a new normal, it should inspire African countries to shift to alternative innovative ways to remain relevant.