The second roundtable on Equity in Intra-Africa Trade-Induced Industrialized and Integration was held Kigali, Rwanda from 25th – 26th July 2018.
The Roundtable was hosted by the Thabo Mbeki African Leadership Institute (TMALI), the Pan-African Strategic and Policy Research Group (PANAFSTRAG), the Economic Commission for Africa (UNECA) in partnership with the Pan African Chamber of Commerce and Industry (PACCI), the United Nations Development Program (UNDP), African Union Commission and the African Association for Public Administration and Management and was attended by 26 participants from Ethiopia, Ghana, Kenya, Nigeria, Rwanda, South Africa, Tanzania, Uganda and Zimbabwe.
The Roundtable series was launched in 2016 and focused on Public-Private-People-Partnership (4Ps) “Living Labs” In Fast-Tracking the African Continental Free Trade Area (AfCFTA).
The series is set within the context of increasing marginalisation of African countries in the global trade and economy and evolved based on what appears to be growing political will by African Union (AU) member States through Regional Economic Communities (RECs) to implement AU and other existing protocols on cross-border management and free movement of African Nationals.
The Head of TMALI, Prof Vusi Gumede officially opened the event and challenged delegates to think critically about what is meant by industrialisation or Integration and to question if the reference to the two terms is not merely broadened manufacturing base.
Mr Prudence Sebahizi delivered the keynote address on behalf of Mrs Treasure Maphanga, Head of African Continental Free Trade Area Unit, Department of Trade Industry at the AUC.
Mr Sebahizi stated that the AU valued stakeholders engagement and gave an overview of the journey towards the signing of Africa’ Continental Free Trade Agreement (AfCFTA) on 21 March 2018 and highlighted various protocols signed by Heads of State and Government and several which remain unsigned, including; the Investment, Intellectual Property protocol and the Competition protocols.
Additionally, he described the AfCFTA’s Institutional framework which includes; the Assembly of African Union Heads of State and Government, Council of African Ministers, responsible for Trade State Parties. Comprised in the framework are lower organs such as; Committee of Senior Trade Officials, AfCFTA Secretariat, Dispute Settlement Body, Sub-Committee on Trade in Services, Sub-Committee on Trade in Goods, and the African Union Sub-Committee of the Directors-General of Customs.
The Secretariat of AfCFTA will function as an autonomous structure designed to be independent, and located outside the African Union Commission. The AUC’s Department of Trade and Industry will act as a coordinating body during the transitional period.
The Roundtable made the following observations:
Industrialization promotes economic diversification and efficient use of resources. Intra-Africa trade has an important role to play in the development of Africa’s domestic markets.
The creation of a Pan-African market is expected to raise intra-Africa trade by about 52% by 2022. AfCFTA brings together 55 countries with a combined population of 1 billion people and will generate a combined GDP of US$3.4 trillion.
Trade will trigger a virtuous cycle of more intra-African trade which has the potential to drive the structural transformation of economies and bring about the necessary transition from low productivity and labour intensive activities; thus enabling the creation of better-paying jobs and consequently contributing to the eradication of poverty.
The Free Trade area can facilitate industrialisation by creating a continental market, unlocking manufacturing potential, while bolstering Africa’s position as an international negotiating bloc.
The Roundtable highlighted several opportunities and challenges for AfCFTA; these include speed of ratification, requisite capacities at national, regional and continental levels. Moreover, Foreign Direct Investment (FDI) can be used to drive industrialisation by designing effective policies and introducing measures to increase domestic demand.
Additional challenges to the AfCFTA include fear of the unknown that could lead some countries not to sign, tariff reductions, opposition to AfCFTA from those benefiting from the status quo, limited capacities at national levels to coordinate multi-dimensionally policy frameworks, lack of role clarity between AUC and RECs, Expensive credit. Political will, Harmonisation of macroeconomic policies, Gaps in the capital market, Concerns over revenue and job losses, Inadequate Infrastructure.
The UNDP representative indicated that the UNDP is committed to help countries design & deliver integrated solutions to complex development problems that require multi-sectoral actions across economic, social & environmental issues. Furthermore, the UNDP welcomed the decision of member states and is ready to work & share its experiences & resources with the reinvigorated NEPAD.
Implementation of the AfCFTA may have a significant effect on member countries, regions and continent-wide since financial integration impacts on business cycles and hence the desire for alternative fiscal and monetary policies. Barriers to trade experienced are the cost of transportation, import and export procedures, inadequate infrastructure, inadequate financing, Tariff and Non-Tariff Barriers, the political will to implement regional trade commitments.
The Roundtable concluded that the AfCFTA must be used as a flagship project towards the achievement of the agenda 2063, and be reviewed every five years to allow for deeper integration, take stock of lessons learned to increase its effectiveness.
The Roundtable also noted that efforts must be made to incorporate the Living Labs model in the implementation of the African Continental Free Trade Agreement. Moreover, African Governments should create enabling conditions and policies that favour and support Intra-Africa trade to drive their development. Moreover, harmonising economic policies and building the requisite capacity in partnership with institutions like PACCI, ACBF, AAPAM.
Moreover, given the increasing protectionism across the world, Africa must use “Smart protectionism” to protect infant industries and as a consequence ensure that Intra-Africa trade thrives. African governments need to pay attention to the informal sectors as a significant contributor to employment and economic activity, mainly cross-border traders to ease the problems they face while doing business.
The Roundtable concluded that further research should be conducted on the legal, economic and political implications of the Africa Continental Free Trade Agreement highlighted during the various presentations and panel discussions. The Papers presented at the Roundtable will be published as policy briefs and a book.