AfCFTA, best stimulus for Nigeria, others to overcome Covid-19 crisis, says UNECA
But only 30 countries, excluding Nigeria, 24 others, have ratified agreement By its current status, Nigeria can’t join AfCFTA’s negotiations, employment decisions
IF IMPLEMENT ED, AFRICA DOES NOT NEED a Marshall Plan to ride out of the ongoing coronavirus crisis, as it has a more powerful tool in the African Continental Free Trade Area (AfCFTA), to use, in accelerating regional and economic integration and prepare for uncertain times, the United Nations Economic Commission for Africa (UNECA), has said.
According to UNECA’s executive secretary, Vera Songwe, with the AfCFTA, Africa had collectively penned its own blueprint for growth. “We need to talk about Africa and the AfCFTA. Our Marshall Plan is the AfCFTA. The AfCFTA is our plan, so let us take it and run with it,” she said.
According to Songwe, the Marshall Plan for Europe was about 160 percent of their GDP traded to bring back growth after the World War II. “What happened to us is that we were all waiting for a health crisis, but we got an economic crisis first, which was very steep, very deep, not just for us but for the rest of the world,” she said.
The latest World Bank report said the AfCFTA represents a major opportunity for countries in Africa to boost growth, reduce poverty, and broaden economic inclusion. If implemented fully, the trade pact could boost regional income by seven per cent or $450 billion, speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035.
However, there is a snag here that would hinder the full realization of the UNECA boss’ assertion on AfCFTA. Till date, only 30 out of Africa’s 55 countries (that is 54.5 percent) have ratified the AfCFTA agreement. Nigeria, the continent’s economic powerhouse and most populous nation, is among those which are yet to ratify the accord.
AfCFTA was expected to have come into operation last June, though it was put off due to Covid-19 pandemic. This situation would have adversely affected the expected socio-economic impact of the agreement for the continent.
Ofon Udofia, an export and trade expert told Business A.M. in an interview, that going by Nigeria and 24 other African countries’ non-ratification of the AfCFTA agreement, it means “we will not be contacted or allowed to join in some negotiations and some important issues.
“Even in employment decisions, Nigeria would not be allowed to participate or send its citizens to seek employment within the AfCFTA,” said Udofia, executive secretary and chief executive officer, Institute of Export Operations and Management (IEOM).
Meanwhile, Songwe said the ECA estimates that economic growth in Africa in 2020 will drop from 3.2 percent to -2.8 percent to about zero percent growth as a result of COVID-19, a situation she described as disastrous, throwing an extra 20 million people into poverty in a continent where almost 300 million people cannot afford one meal a day.
The World Bank also estimates that 27 countries in the world, including Nigeria, Africa’s most populous country, could experience food crisis due to shortages as a result of Covid-19. Currently, the country is dubbed the world’s poverty capital with at least 97 million people in the country fallen into extreme poverty.
Songwe, who spoke during a panel discussion to mark the inaugural Africa Integration Day, set aside by the African Union to mark its implementation, said: “COVID came and has taken us quite far behind because we need to reassess where is it that we want to go, and how we want to go. We definitely need to do things differently.” She added that it was crucial for Africa to integrate its financial systems to create a mutualized system of financial stability that works for the continent or regional monetary cooperation as in East Asia.
She described the Afreximbank Exchange Facility as an excellent step in the right direction, but advised that more was needed to integrate the economies and financial sectors in Africa. This means, “When there is a crisis, we come together and we pull and mutualize our resources so that those who are the most hit get some resources.”
The United Nations Economic Commission for Africa executive secretary dissuaded against a common currency system for the countries to get a mutualized system of financial stability that works for the continent. Rather, “we need to ensure that as we build the AfCFTA and trade integration, we begin to build stronger, much more robust monetary and fiscal systems that can ensure that, as a continent, we actually can work with each other in a more effective way,” she added.
According to her, Africa must produce internally. The continent imports $14.7 billion worth of drugs, over 95 percent of its demand. She said countries like Egypt, Kenya, South Africa, Ethiopia and Cameroon can produce drugs for the continent; adding that what needs to be worked on are Intellectual Property Rights (PR) issues.
The ECA executive secretary was joined on the panel by Mukhisa Kituyi, secretary-general of UNCTAD; Benedict Oramah, president of African Export–Import Bank (Afreximbank); Wamkele Mene, first secretary-general of AfCFTA; Chileshe Mpundu Kapwepwe, secretary-general of COMESA, and Paolo Gomes of AfroChampions. The panellists agreed that AfCFTA was the best stimulus for Africa to come out of the COVID-19 pandemic. They also agreed the crisis was a great opportunity the continent should not waste, in particular using lessons learned for Africa’s industrial development; produce its own drugs and save billions of dollars in the process; digital inclusion is paramount; and working closer together than ever as one united Africa with the private sector too, among others.