AfCFTA engine for economic growth
The African Continental Free Trade Area (AfCFTA) is indeed an engine for economic growth and industrialisation for sustainable development on the continent. This was the sentiment expressed yesterday by Minister of Industrialisation and Trade, Lucia Iipumbu when speaking in the capital at the Bank of Namibia’s 21st annual symposium.
Iipumbu stated that the AfCFTA agreement brings together 55 countries with a combined population of 1.3 billion people in a single market worth US$2.5 trillion.
“It aims to significantly boost IntraAfrican trade through harmonisation and coordination of industrialisation and trade liberalisation. The expansion of markets will provide member states with larger markets for their goods and services and will also provide larger opportunities for investment across borders,” explained the trade minister.
The symposium is focused on how Namibia can reap benefits from the AfCFTA. Iipumbu added that the AfCFTA discussion comes timely and there is no better opportunity than now to assess the challenges and opportunities offered by the agreement. She further stated that the pandemic brought with it a sense of urgency to have a collective self-sufficiency as a continent.
The AfCFTA is envisaged to promote continental integration, which will make Africa competitive by promoting productivity and enhancing competitiveness. This will be done through continental value chains,
Africa-wide business networks, and the exploitation of opportunities that will benefit member states through enhanced trade, employment creation, and poverty reduction.
The minister of trade continued that Namibian industries would have a larger market for their goods and services and a larger source market for industrial inputs and consumer goods if it reaps the benefits well. “Namibia will benefit from greater opportunities to support industrialisation and sustainable development in the country, and enjoy opportunities for more jobs,” she said.
Iipumbu reiterated that benefits would accrue to the producers, processors, exporters, importers, consumers, and indeed the national economy. She went on to say that the private sector is a key stakeholder and beneficiary of the AfCFTA because businesses move goods and services and invest in-andacross borders.
At the same occasion, Johannes !Gawaxab, governor of the Bank of Namibia, said the AfCFTA offers an opportunity for Namibia to address its economic challenges.
These challenges include a small economy, over-reliance on the export of primary commodities, a constricted export and manufacturing base, underdeveloped industrial and value chains, inhibitive regulatory and trade barriers, and competitiveness challenges.
“Addressing these challenges will assist and enable trade facilitation and trade creation. It therefore, entails that we modernise, simplify and harmonise our export and import procedures, and ensure a friendly business environment and address bottlenecks that hinder trade,” said the governor.
Alternative import sources in Africa are likely to be associated with lower tariffs and therefore lower revenue collection for some. According to the central bank governor, the removal of trade taxes may increase imports into Namibia and result in the displacement of Namibian industries by more well-established and efficient continental producers. While this switch may reduce the cost of living, it has implications for macroeconomic stability, he said.
“This can be through the worsening of the balance of payments and more directly by putting pressure on the international reserves of the country, and an increase in the already high unemployment rate,” !Gawaxab explained. -mndjavera@nepc.com.na