AfCFTA will launch Africa forward post-COVID-19

years of progress in fighting poverty. Similarly, COVID-19 could set back progress in building human capital, as school closures continue to affect nearly 253 million students, potentially causing losses in learning which does not bode well for the continent’s future.

The full implementation of the AfCFTA will certainly stem a downward trajectory by progressively eliminating tariffs on intra-African trade, making it easier for African businesses to trade within the continent and benefit from the growing African market. Africa, being a diverse continent fragmented into 54 States which are organised into trade blocs and associations under the African Union as members, will necessarily morph into a single business entity, or as close to one as anyone can hope for such a heterogeneous cocktail of diverse people.

COVID-19 aside, the continent already faced a myriad of social, economic, and political challenges weakening current African trading blocs and their ability to promote integration and intra-trade among each other. The share of intra-African exports among constituent countries (trade among each other) as a percentage of total exports out of the African continent was still a miniscule 17% as at 2017, which remains low compared to levels in Europe (69%), Asia (59%), and North America (31%).

This is an important reason to expect that trade will be a key driver of growth in Africa. The long and short of it is that more than 80% worth of merchandise exported by any African country is destined outside Africa and this ipso facto necessitates the need for a bloc occupied with “increasing (international) integration through customs and monetary unions, free trade areas, and common regulatory and legal frameworks” for international trade facilitation as much as other economic blocs and associations do for intra-trade stimulation.

We may harp on about the need to migrate from primary goods production and increase beneficiation by value addition so we export more valuable products, improve job creation and the like. But it goes without saying that we still are a minerals and other raw products exporter so we need a (single) bloc that facilitates that to the world and representing a solid 1 trillion US$ worth voice for better deals on the global market. This must be the immediate plan to coagulate the mini-country trades into a formidable trade monolith and which speak with might to already powerful industrialised nations.

AfCFTA promises to be that.

In a nutshell, the agreement is expected to: create a liberalised market for goods and services through successive rounds of negotiations; contribute to the movement of capital and persons and facilitate investments; lay the foundation for the establishment of a continental customs union; enhance the competitiveness of the member States economies and promote industrial development through diversification and regional value-chain development, agricultural development and food security. And in the long run, it will help promote and attain sustainable and inclusive socio-economic development, gender equality and structural transformation across the continent.

But, what would this mean for individual entrepreneurs as opposed to improvement of whole nation fundamentals? The AfCFTA agreement has the potential to become a game-changer and bring great opportunities such as: exposing business to African markets and exposure with as little hurdles as possible improving the intra-African trade landscape and export structure; creating a sound global economic impact as the bloc facilitates block negotiations with the world as opposed to individual entrepreneurs making petit and individual negotiations on the global arena; developing better policy frameworks which will help the business environment even further; fostering specialisation and boosting industrialisation; strengthening regional and interState co-operation as well as bringing politics and economics in tandem; increasing employment and investment opportunities, as well as technological development; providing the opportunity to harness Africa’s population dividend; among other benefits.

The advent of COVID-19 vaccination brings a ray of hope yet we should not lull ourselves into instant comfort with this as the coronavirus shows signs of being with us for a while longer.

Similarly, AfCFTA is not the panacea to all of Africa’s challenges. It’s very implementation is likely to encounter its own challenges. For instance, the implementation is complex and poses significant adjustments costs for member countries; it is also hard to ensure broad-based gains for all member States as is envisaged.

Admire Maparadza Dube is a financial analyst and banker. He writes here in his personal capacity