January 25, 2021 / 11.00 AM --
“The African Continental Free Trade Area (AfCFTA) if not handled well, is set to fail. The ambitious 55-nation pact just like the African Union (AU), has the same script, but with different cast.
“Technical barriers to trade, such as corruption and cumbersome custom systems must be removed,” said Johannesburg based international trade expert, Tumelo Mabuza.
Other obstacles ranging from ubiquitous red tape and poor infrastructure to the entrenched protectionism of some of its members must be overcome if AfCFTA is to reach its full potential. Mabuza said some state parties are yet to submit their market access offer and tariff liberalization schedule.
“This is a huge challenge. There are also outstanding issues with the operational instruments. The commission and the AU should be encouraged to immediately address these issues,” he said.
Mabuza said the continent’s 54 individual units lack power and leverage as they engage continent-sized economies like the US, China, India or the EU. He said the AU has failed Africa when it comes to democratic elections in some countries as well as silencing the gun.
“I see no difference between the AU and AfCFTA. I already know the outcome,” he added.
Fifty-four countries have signed this agreement, 33 have ratified it, over 40 have submitted their tariff offers. The pact calls for 90% of tariffs to be eliminated, but only after five to 10 years.
According to President Cyril Ramaphosa, South African President and also the current AU chairperson, AfCFTA inspires the greatest hope for economies of scale, promising a common market of over 1.2 billion people and double that by 2050.
Infrastructure a thorny issue
According to Institute for Security Studies researcher Kouassi Yeboua, AfCFTA will probably be hampered by Africa’s huge infrastructure deficit and low quality of trade logistics.
Overcoming the deficit of infrastructure, which has been a major constraint to both economic growth and intra-African trade expansion, will become ever more critical during the implementation of the AfCFTA.
Mabuza said infrastructure interconnectivity such as poor road and rail links as well as excessive border bureaucracy will not disappear overnight and this is set to impede traders’ desire to reap the full benefits of free trade, experts say.
6th PIDA Week positions infrastructure at the heart of AfCTA’s success
Key speakers during a virtual 6th Programme for Infrastructure Development in Africa (PIDA) Week, emphasized the need for Africa to continue to invest in quality and sustainable infrastructure if AfCFTA is to deliver for the continent.
Officially opening the event, South Africa's International Relations and Cooperation Minister, Dr. Naledi Pandor said AfCFTA's main objective to boost intra-African trade can only be achieved with adequate quality infrastructure.
Dr Pandor said current forecasts and estimates suggest that Africa’s infrastructure development requires between US$130 and 170 billion annually.
“While Africa grapples with mobilizing domestic resources and private sector investments for PIDA projects, it needs to also address issues of good governance, which can affect the quality and delivery of infrastructure,” she said.
Large-scale transboundary projects implemented under PIDA are vulnerable to corruption and mismanagement due to their scale and political and strategic importance.
Concerns about countries’ readiness
A 2019 survey by Kasi Insight revealed that skepticism within the continent is warranted. Also some experts feel that AfCFTA’s launch was hasty without addressing critical challenges and will not fulfil the intended objectives of structural transformation of African economies.
There have been concerns about countries’ readiness for the trade deal, many are yet to address issues bordering strategies and customs procedures.
Specifically, pre-existing nuances that are peculiar to African markets in terms of alignment with Western partners, language, visa restrictions, currency, insecurity, Customs Union, existing trade agreements in regions, dependence on commodity exports, infrastructure, low manufacturing activities among others, raise concerns about the expected progress from the AfCFTA market.
Beitbridge border post December chaos, a case study
Customs delays and administrative bottlenecks at border posts underscore the challenges facing African traders and at the same time accentuate a strong desire by traders for a free trade zone.
In December chaotic scenes were witnessed at the Beitbridge border post. Trucks were stuck for two weeks. Free movement of persons within the continent is still a major challenge.
The South African Association of Freight Forwarders (Saaff) chairperson, Dr Juanita Maree said the implementation of AfCFTA requires urgent action to ensure the smooth flow of goods and people through all borders, and at Beitbridge in particular. “The agreement is a phenomenal, once in a lifetime opportunity to bring 30-million people out of extreme poverty and to raise the incomes of 68-million others who live on less than $5.50 per day.
“Trade facilitation measures that cut red tape, ease movement in a secure environment to simplify customs procedures in the AfCFTA framework will help drive $292-billion of the $450-billion in potential income gains,” Dr Maree said.
“We are not doing this to prove anything to anyone outside the continent – we are doing this because it is the interests of Africa to have an integrated market.” Wamkele Mene SG of the AfCFTA in Accra today. AfCFTA, secretary general Wamkele Mene said there’s no trade agreement where all members were ready at the same time. Mene is positive and told a virtual press conference last week that Africa’s journey to market integration has begun in earnest.
“Talks that the AfCFTA arrangement was being rushed are unfortunate. Countries like Ghana, Egypt and South Africa were prepared with the required customs infrastructure to ensure commercially meaningful trading started,” he said,
Find a link to the survey report here!
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