Delayed trade pact ‘a missed chance’

The delayed implementation of the African free-trade pact is a missed opportunity as it offers “probably the best form of stimulus” to overcome the coronavirus pandemic’s effects, says an enterprise that liaises between business and the AU.

The delayed implementation of the African free-trade pact is a missed opportunity as it offers “probably the best form of stimulus” to overcome the coronavirus pandemic’s effects, says an enterprise that liaises between business and the AU.

“We unfortunately don’t have the ability to play with quantitative easing and the exercise of printing money,” Paulo Gomes, vice-president of the AfroChampions Initiative, said. “Our stimulus is really to enhance trade among countries and create the conditions to create jobs, develop small and medium enterprises and make sure we create liquidity in the market.”

Gomes, a former executive director of the World Bank, is one of 25 African business leaders, including Gervais Djondo, co-founder of Ecobank Transnational, and Ichor Coal CEO Nonkululeko Nyembezi-Heita, who wrote an open letter to political leaders. In it, they warn that the postponement of trade under the African Continental Free Area would be a mistake.

First trade under the agreement, which was due for July 1, has been delayed due to the pandemic. While the agreement entered into force legally in 2019, protocols for trade in goods and services need to be agreed to make the July deadline.

Instead of a full-blown delay, countries should work to facilitate the transport of medical and personal protective equipment as an immediate response to the virus, while concluding outstanding negotiations via virtual meetings, Gomes said.

The health and economic consequences of the virus will result in Sub-Saharan Africa’s first recession in 25 years, the World Bank estimates. African finance ministers have called for emergency economic stimulus of $100bn, including debtservice waivers.

The pact covers a market of 1.2-billion people with a combined GDP of $2.5-trillion — the world’s largest free-trade zone. It aims to lower cross-border tariffs on 90% of goods, facilitate the movement of capital and people, promote investment and prepare for a continentwide customs union.