The Agreement Establishing the African Continental Free Trade Area (AfCFTA) was adopted on 21 March 2019. The AfCFTA has the potential to radically change the continent’s development trajectory and transform the continent into a global powerhouse. It builds on initiatives and developments made by African states towards deeper economic integration. By further defragmenting African trade, the AfCFTA enables healthy value and supply chains for goods and services among African states. It would progressively dissolve barriers to the movement of people, goods and capital to create a $3.4 trillion economic block for the betterment of the lives of 1.2 billion Africans.
With the economic challenges brought on by the COVID-19 pandemic, there is an urgent need to retain the ambition for a prosperous and self-sustained socioeconomic future for the continent. We must continue working towards ushering in this next stage of the African economy now more than ever.
2020 was set to be a significant year for intra-African trade as 1 July was selected as the starting date for the elimination of tariffs and the commencement of trading under the AfCFTA. COVID-19 has, however, stagnated progress. The 1 July AfCFTA trading-commencement date has been postponed indefinitely and countries have instead placed cross-border trade and movement restrictions to protect their populations. Internal lockdowns and curfews have led to lowered productivity and spending within countries and the overall uncertainty has deterred foreign investment. Instead of resurgent African trade under the AfCFTA, COVID-19 has instead placed sub-Saharan Africa on course for a record low economic growth rate of -1.6% in 2020.
The Unfortunate Timing of the COVID-19 Outbreak
While there is no convenient time for a global pandemic to break out, the COVID-19 outbreak was particularly unfortunate as it threw a spanner into the AfCFTA works. It postponed the discussions needed for the commencement of trading. The public health measures it has necessitated have reversed economic growth and caused the limitation of intra-African movement.
The AfCFTA Agreement entered into force on 29 April 2019. The next step was for the African Union and the African Ministers of Trade to finalise the supporting instruments in preparation for the commencement of trading under the AfCFTA. The deadline for this was February 2020 with 1 July 2020 scheduled as the first day that trading under the AfCFTA would begin.
“Africa should not despair and fall into despondency – from a trade perspective, we should see this crisis as an opportunity” observed Secretary-General of the AfCFTA Secretariat Wamkele Mene. Mene was optimistic despite the negative effect of the prevailing COVID-19 on global public health as well as global capital markets, trade and global supply chains. The AfCFTA does offer the opportunity to drive inclusive economic growth as it will impact the 4th industrialisation, e-commerce, digital trade, and the empowerment of women and young people to boost productivity across all of Africa.
The elimination of tariffs is forecasted to increase trade in Africa by 15-25% in the medium term and African industries are expected to double production to nearly $1 trillion in a decade. The African market has 1.2 billion people, a youthful labour force, 7 of the 10 fastest-growing economies, and a combined GDP of $2.5 trillion. This empowered economic position would undoubtedly have been useful to combatting the present pandemic and we should remain focused on continuing its implementation.
Renewed Sense of Urgency
Africa is highly dependent on agricultural and commodity exports to balance the importation of consumer and industrial goods. The traction that had been made towards the AfCFTA was driven by Africa’s desire to decrease this dependence. The COVID-19 pandemic is the latest indication of the urgent need to build the continent’s economic resilience that reinforces the purpose of the AfCFTA.
The AfCFTA is an opportunity to reconfigure Africa’s supply chains, develop regional value chains, boost intra-African trade, and therefore reduce the continent’s dependence on international markets.
COVID-19 has opened eyes to not just the opportunity but the necessity of the AfCFTA. Mene reiterated his optimism and observed that despite the setbacks: “The political commitment remains, the political will remains to integrate Africa’s market and to implement the agreement as was intended.”
While the AfCFTA launch as envisioned remains postponed, work towards realising the potential of this platform has not. The AfCFTA secretariat, the AU, and the Member States have realigned their focus to two objectives:
- Enabling as much trade as possible despite necessary border closures travel restrictions.
This can be driven through the easing of tariff restrictions as had been planned at in anticipation of the 1 July AfCFTA trading commencement date. Additionally, African states can work towards the implementation of standard protocols to open intra-African trade routes with adequate public health measures to minimise the risk of transmission. Opening trade will take advantage of the growing successes of digital commerce across the continent as the convenience of non-physical shopping is clearer now more than ever. It is particularly necessary to make these allowances for the movement of essential commodities and health equipment. The AfCFTA implementation strategy includes plans for customs cooperation and trade facilitation that would drive the Member States to develop the infrastructure required to support higher trade volumes. The AfCFTA also affords a forum for States to negotiate on what commodities count as essential for targeted trade facilitation.
- Beginning long-term planning on how to leverage the AfCFTA to help Africa fight future pandemics.
One such approach could be examining opportunities for the development of an African generic medicine industry to increase the availability and decrease the costs and roll-out time of medication. Recently, the US secured stockpiles of remdesivir—which is showing promise in the treatment for COVID-19—leaving the rest of the world without access for the next few months. Without pharmaceutical production capacity in Africa, the continent is condemned to wait for the development of accessible alternatives and this may well be the case during the next pandemic. Another approach is leveraging intra-African value chains towards the development of industries that can manufacture medical equipment. Ventilators, masks and other equipment useful to the fight against COVID-19 are in short supply in Africa and manufacturing countries have instituted export bans on such equipment to protect their supplies. Kenya, Senegal, South Africa, and Nigeria have taken steps towards promoting the local production of medical equipment to combat COVID-19. With regional approaches to developing these value chains within an open African market, such progress can be leveraged to the benefit of all 1.3 billion Africans. Lastly, the free movement of labour across African states under the AfCFTA will enable healthcare workers from around the continent to attend to high-needs areas more easily.
Towards a Positive Prognosis
Trade Law Centre Executive Director Trudi Hartzenberg observed that “The bottom line is that the AfCFTA can be reconfigured for the 21st Century, where we will definitely encounter more such global crises. It highlights the importance of services sectors – healthcare, transport and many others are important to address the pandemic, to get medical equipment where it is needed, to get skilled healthcare workers to desperate areas.”
The urgent need to retain focus on the AfCFTA in light of COVID-19 is based on the need to end the pandemic and make progress towards sustainable economic recovery. Declining commodity prices, declining incomes, growing unemployment, struggling businesses and widespread illnesses caused by the pandemic are present challenges that will cast a shadow on the continent’s economic future. To obtain the most positive prognosis possible, a return to the pan-African zeitgeist of cooperation and shared prosperity of the AfCFTA is essential.
African states have been implored to prioritise coordinated trade and economic policy responses to position the continent for the inevitable post-pandemic economic restructuring. Trade restrictions and other protectionist measures, while intended to protect the intra-African spread of COVID-19, only serve to further disrupt value and supply chains.
As important as the AfCFTA is, it is merely the codification of the intent of African states to make the African economy better. Though progress on the AfCFTA has not continued as expected, it must be the “rallying initiative to drive the post-pandemic economic recovery and the strengthening of African domestic, regional and continental value and supply chains.” Sera Afrika recognises that the bulk of the work is fundamentally extratextual: the AfCFTA is a solid framework but it is upon countries, organisations and individuals to build their capacities to contribute to continent-wide value and supply chains. We focus on data-driven policies and innovations that increase efficiency among African producers, expand trade interlinkages, promote ecological responsibility, and bridge in the next generation of the African workforce. We continue to work towards a sustainable and globally competitive African market with the capacity and resilience to withstand shocks such as COVID-19 and continually deliver quality of life improvements for Africans. By keeping the promise of the AfCFTA in mind, the ongoing pandemic can serve to inspire countries, organisations and individuals towards the stabler footing that integrated African trade affords.