AfCFTA offers good opportunities

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An article

On March 21, 2018, a very important event – the AU Extraordinary Summit – witnessed the signing of an agreement that launched the African Continental Free Trade Area (CFTA) intended to make Africa the largest free trade area created since the formation of the World Trade Organisation.

It is in the light of this positive development that the Minister of Business Development, Dr Ibrahim Mohammed Awal, has urged young entrepreneurs in the country to seize the opportunity offered by the CFTA, which has already come into effect, to grow and expand their business to meet global standards.

In so doing, all entrepreneurs will have to keep to applicable standards and make the issue of quality, an essential part of their operations.

Last year’s event in Kigali, Rwanda, was significant because it demonstrated to the world in clear terms that African leaders ought to look within themselves and galvanise efforts towards internally induced growth.

The African Continental Free Trade Area is aimed at creating a single continental market for goods and services and thereby Continental Customs Union.

It is also to expand intra-African trade through better harmonisation and coordination of trade liberalisation and facilitation regimes.

Again, it aims to address the challenges of multiple forms of membership and expedite regional and continental processes.

Furthermore, the agreement seeks to enhance competitiveness at the industry and enterprise level through the exploitation of opportunities for large scale production, continental market access and better re-allocation of resources.

To be able to make a meaningful impact, the CFTA will have to improve the quality, as well as the quantity of intra-African trade.

This is because the objective of the CFTA is primarily to engender more intra-African trade which currently comprises just 15 per cent of the continent’s total merchandise trade.

When compared with intra-regional trade in other continents, this volume of trade is quite low.

To make the CFTA successful, there is the need to give room for applicable standards. This means that governments on the continent are required to invest massively in activities relating to standardisation and related issues.

In order to meet the continent’s needs, therefore, more of the predominantly primary commodity trade among African countries will have to be reduced in favour of manufacturing. For example, instead of exporting raw cocoa to Europe and the US, Ghana and Côte d’Ivoire should keep more of the crop at home to produce chocolate and other cocoa-related manufactures.

Similarly, batteries used to power electric vehicles could be manufactured in the Democratic Republic of Congo and Zambia, where the key input, cobalt, is found in abundance, instead of exporting the mineral to China.

This way, the vision of the CFTA will become a reality and when this happens, intra-African trade could increase by over 50 per cent over the next five years.

While the signing of the CFTA is an indication of Africa’s preference for intra-continental trade and internally induced growth, leaders on the continent have to be mindful that the attainment of the ultimate goal of the CFTA, which is to strengthen Africa’s role in trade, may come with some challenges even though the ultimate goal is achievable.

This means that all major challenges or problems ought to be consciously, meaningfully and purposefully addressed in a business-minded fashion. For instance, the terrible state of socio-economic infrastructure is one of the reasons why African goods are not competitive. This is a challenge that must be fixed without delay.

As was pointed out by President Akufo-Addo during the AU Extraordinary Summit in Kigali, Rwanda, on March 21, 2018, “the time is now right for Africa to demonstrate strong political will to make an African Union an economic and political success and to make the project of integration real.”

Indeed, with great commitment, the project of integration can be made real by African countries. If this challenge is addressed – and indeed it can surely be addressed with alacrity – the sky will be the limit!

Source

https://www.myjoyonline.com/opinion/2019/july-3rd/opportunities-offered-by-africas-continental-free-trade.php