Free trade pact alone not enough for Africa
Top officials have sounded warnings over the gap between the ideals of scrapping Africa’s trade barriers and implementation of the policy. Free trade commenced officially under the African Continental Free Trade Area agreement at the start of 2021, but so far there has been little trading under the agreement.
Top officials have sounded warnings over the gap between the ideals of scrapping Africa’s trade barriers and implementation of the policy.
Free trade commenced officially under the African Continental Free Trade Area (AfCFTA) agreement at the start of 2021, but so far there has been little trading under the agreement.
UN Economic Commission for Africa (ECA) acting executive secretary Antonio Pedro told delegates at the launch of the AU’s Africa Industrialisation Week the agreement was “the most powerful incentive industrialists can have to invest in a manufacturing plant based in Africa” as it connected a market of more than 1.3-billion people, but it could not on its own guarantee industrialisation. It had to be implemented, he said.
The continent’s industrialisation is among the aims of both the AU’s Agenda 2063 and the UN’s Sustainable Development Goals. The Russia-Ukraine war and the Covid-19 pandemic confirmed that this aim was the correct one, but it also showed up “the yawning gap between our lofty ambitions and our paltry performance in this crucial field”, he said.
AU Development Agency (AUDA-Nepad) CEO Nardos Bekele-Thomas echoed Pedro’s sentiments, saying that the AfCFTA was “breaking new ground”, but it would mean little if it wasn’t implemented. This was especially true for the projects to empower female traders, which she said required “bold decisions and bold actions and follow-through”.
“A concerted and co-ordinated effort is now needed to strengthen Africa’s resilience through improved local manufacturing, production and supply chains, and a more robust private sector, particularly women-led [small and medium-sized enterprises] and increased regional markets and trade.”
Some small business owners are sceptical about the AfCFTA, saying it now benefits only bigger industries. Countries with smaller economies are concerned the agreement will benefit only those with large manufacturing capability. Already 43 of the 55 AU member states have ratified the agreement.
In a joint statement ahead of the week’s activities, the AU Commission, AUDA-Nepad, the UN Economic Commission for Africa and the UN Industrial Development Organisation (UNIDO) have said the private sector should be “the engine for Africa’s industrialisation”, but the right conditions were needed for this to happen. These included infrastructure, stable macroeconomic conditions, an educated, skilled and healthy workforce, and access to financial services.
They said the action plan for accelerated industrial development in Africa, which was adopted 14 years ago, “has suffered in its implementation”.
The plan, formulated by the AU Commission together with the UNIDO, was supposed to mobilise financial and nonfinancial resources to increase Africa’s competitiveness in the world, but a recent AU review showed that member states have done little to implement this framework.