Six months are over after the launch of the African Continental Free Trade Area (AfCFTA). It may be too early to evaluate the progress of the free trade arrangement due to a number of reasons. Foremost are the imminent delays such groupings will take to fructify. A glaring example is the European Union, which took 72 years from conceptualization to full scale implementation. AfCFTA, having 55 countries under its purview, is a much larger regional grouping of countries of different scales of development, growth prospects, indebtedness, natural resources, geographical and demographic profiles. The impact of the Covid-19 pandemic –initially at the time of launch and later at the implementation of integration process- cannot be overlooked. Secretary General of AfCFTA secretariat Wamkele Mene,was right on the mark, when he stated that it has completed the easiest part of the agenda –consensus of 55 countries to evolve a single set of rules- but implementation is a long drawn out and difficult process.
The challenges before AfCFTA are worth examining to take a realistic view of the situation. Customs authorities of participating countries should synchronize their tariff harmoniously and for that they should know the rules framed, engage in a detailed study on how to retool their customs tax structure to integrate with the continent wide rules. This needs consultations, impact assessments and adjustments on a give and take basis. That is possible only when countries have the vision of long term advantages of integration shadowing short term gains and losses. This cannot come in a vacuum. All stakeholders should work in tandem –particularly African Union, African Development Bank and banks in the public and private sector in individual countries, regional economic groupings, governments, private sector and of course AfCFTA.
Understandably, there are some reservations expressed by industries in individual countries, particularly small and medium enterprises because of the influx of foreign goods pushing them out of their comfort zone in their home country. Not only their negative vibes of market integration should be addressed by launching massive continent wide campaigns but also there should be concrete efforts to build the capacities by introducing finance facilities for small-to-medium enterprises, which are facing huge liquidity and marketing bottlenecks. Focus on building entrepreneurial spirit across the
continent, skilling and re-skilling people to adapt to competition and changed job markets, promoting cross border handholding of entrepreneurs, and accelerating flow of investments beyond the continent etc should become a part and parcel of the roadmap to achieve the integration of the markets.
Short term measures critically needed for the integration should not be put in the backburner. Common currency can be a far -fetched goal. Yet, there can be interim arrangements like a pan-African payments and settlements platform, which should be a digital clearing house for facilitating trade and investments should be put in place at the earliest. That can motivate bigger corporations and institutional investors to engage in cross border investments. It augurs well that AfCFTA is setting up an industrial development forum, working together with the African Union, to invite investors, industrialists, the private sector, government etc to create a blueprint of industrialization and development in the next three to four years.
That said, there are huge restrictions on the movement of capital in certain countries, not to mention the non transparent routes through which transactions are carried out. To compound the system further, in some countries, there are hiccups in cash transfers from outside. These apprehensions run counter to the huge scope the integration could provide: a market of 1.2 billion people, with a combined GDP of US$3.4 trillion.
What steps are being taken to integrate the minds of the common people and their stakes? There is a limit for what oil and industry can do to the continent. Flip side of the continent’s development model is lack of focus on agriculture, which once upon a time provided the major source of employment, income and exports. Those days are over now with increased focus on oil, mining and industrialization, not realizing the beneficial spin offs agriculture provides for building an inclusive society. Is it not the time to push agriculture into the vortex of the development agenda of the continent as a desirable measure to counter militancy, jihad, deprivation and poverty?
Last but not the least is regarding the free movement of persons within the continent, though it is not a part of AfCFTA. Separate negotiations are going on that front. Undoubtedly, large scale industrialization would create manpower shortages in pockets that have potential to attract investments. Also, the focus on value addition rather than exporting primary goods is going to be the buzzword in all sectors, be it oil, mining, food processing and what have you. Against this backdrop, AfCFTA may consider integrating free movement of people, to begin with at least skilled manpower, in the continent as a core part of its agenda. That will shore up the involvement and commitment of the common man in the integration process.
