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Let’s equip businesses to tap into all-Africa trade opportunities
Author, Ms Pamela Coke-Hamilton. PHOTO/COURTESY.
What you need to know:
- Ms Pamela Coke-Hamilton says: Through AfCFTA, countries can bring down obstacles in the digital space”
The economic downturn caused by the Covid-19 pandemic has sent shock waves across the economies of the sub-Saharan African region.
The Africa Continental Free Trade Area (AfCFTA) Secretariat reports that for the first time in decades, there has been a contraction of GDP of between two and five per cent in sub-Saharan Africa. This is directly attributable to the pandemic.
The Covid-19 crisis has also triggered a reality check. It has exposed the challenges and inequalities of ‘business as usual’ and magnified the risks inherent in a business model, which often does not have inclusivity and sustainability as priorities.
Can the AfCFTA help African economies in the future? I believe it certainly can. From it will flow benefits to the private sector − and primarily the micro, small and medium-sized enterprises (MSMEs) that account for about 80 per cent of Africa’s businesses.
Following an International Trade Centre (ITC) survey that found out that two-thirds of African companies are strongly affected by the pandemic, it is clear any agreement that seeks to make it easier for these MSMEs to trade across borders has an immediate contribution to make.
ITC focuses on helping the African private sector recognise and take advantage of business opportunities that will come with an operational free trade area.
The AfCFTA will stimulate industrial development and value addition as companies exploit economies of scale and access cheaper raw materials due to reduced tariffs. In turn, this will have an impact on prices and consumer choice.
And given that many imports in the future will be inputs for re-export, it also helps drive greater diversification in the region.
Wisely, the architects of the AfCFTA used Africa’s existing regional economic communities (RECs) as the ‘building blocks’ of the new continental arrangement. The integrity of its constituent parts strengthens the new superstructure.
For example, the East African Community (EAC) has made steady progress in putting in place common standards, rules of origin and a common external tariff.
The EAC’s remarkable strides include harmonising monetary policy frameworks and exchange rate operations, rules and practices governing bank supervision, and integrating payment systems, financial markets and financial reporting.
There is much to learn here as we plot the implementation of the AfCFTA.
Digitalisation has been central to keeping MSMEs afloat in the region. Using digital technologies has created new revenue streams and expanded efficient platforms such as mobile banking and digital data management.
Through AfCFTA, countries can bring down obstacles in the digital space via synchronised regulatory approaches on data security, cybercrime, taxation, digital inclusion, and digital and e-transaction laws.
The AfCFTA must be an engine for growth as much as for inclusion. This is why ITC focuses on ensuring MSMEs − especially those led by women and young people − will benefit from the AfCFTA. This is also why ITC recently introduced One Trade Africa, a new programme focused on unlocking the full potential of the AfCFTA for MSMEs.
Pamela Coke-Hamilton is the executive director of the International Trade Centre.
