Understanding the AfCFTA

A webinar held by Invest in Africa (IiA) drew together four expert speakers to discuss the potential of the African Continental Free Trade Area.

Delivering clarity on the potential of the Africa Continental Free Trade Agreement (AfCFTA) was the central aim of a webinar held by Invest in Africa (IiA) on 10 September 2020.

The webinar drew together four expert speakers: Silver Ojakol, Chief of Staff to HE Wamkele Mene, AfCFTA Secretariat; Rene Awambeng, Global Head of Client Relations at Afreximbank; Razia Khan, M.D, Chief Economist, Africa & Middle East at Standard Chartered Bank; Edem Adzegenu, Founder Afrochampions and Private Sector lead at the AfCFTA; and Monica Musonda, Founder and CEO, Java Foods. The webinar was moderated by Omar Ben Yedder, M.D, of IC Publications (and serves as an ambassador for IiA).

Introductory remarks and a welcome from William Pollen, programme director of IiA, focussed on the inspirational message that AfCFTA sends to the youth in Africa – that there is a pan African marketplace out there waiting for them.

Silver Ojakol put some detail to this promise, reporting that 54 of Africa’s 55 countries (the exception being Eritrea) had signed the the AfCFTA, and there were to date 28 instruments of ratification, deposited with the chairperson of the African Union.

“As of the 1st January, when the originating African product gets to any border or Africa, or any African customs territory, those products should immediately begin to enjoy the preferential tariff regime,” he said.

Ojakol further commented that the AfCFTA would add $35 billion to intra Africa trade flows annually

The webinar next heard from Edem Adzegenu, founder of Afrochampions and the private sector lead at the AfCFTA.

He made the point that there is a responsibility for us to understand and educate ourselves on the benefits and the opportunities that AfCFTA represents to derive the full benefits of it.

“We’re hoping that this implementation of the AfCFTA will enable greater efficiencies and a reduction in waiting times at borders. The other advantage is going to be in standards harmonisationso the ablity to move those goods will be much cheaper and easier, integrating markets and breaking a lot of the barriers to inter Africa trade.”

For Razia Khan, adding a macro-economic viewpoint, there’s a need for realism as to how much changes from the very outset. “This is going to be a multi-year process,” she says of the gradual dismantling of tariff barriers.

“We also need to place it in the context of where Africa as a region is today. We know that as a result of the COVID-related impacts, we are seeing much weaker rates of growth across a number of different economies.”

Her more cautious prognosis makes the AfCFTA even more important. “What we’re seeing globally is something of a retreat from globalisation, and a ratcheting up of trade tensions. That said, African economies are in need of additional stimulus and a liberalising of trade regimes.”

But Khan also notes the unprecedented amount of liquidity has been created by global central banks. This is being pumped out into their own economies and some of the recent equity markets’ strength is a sign of this liquidity._

“Eventually that same liquidity is going to be seeking out higher returns,” she said. ”This could be a key opportunity for African economies.”

Monica Musonda’s intervention provided another private-sector perspective to the introduction of the AfCFTA. Her viewpoint as the founder and chief executive of Java Foods (the biggest producer of noodles in southern Africa, outside South Africa) was optimistic, despite her slight disappointment at the limitations of the SADC’s trade regime.

Zambia, the landlocked southern African country where Java Foods is based, has seven neighbouring countries, so there are clear advantages to developing a single Africa market.

“You can imagine the situation earlier this year when all our borders were closed due to Covid-19, not only for exports but also imports!”, she says.

Finally, Rene Awambeng outlined the programmes that the Afreximbank has put in place to complement a new trading environment. These include various financial tools, a trial of which is underway in West Africa, that enables exporters and importers to trade in their own local currencies.

But if there was one take away from the seminar, it was that the every stakeholder must ensure that governments are held to account, and must support their implementation of the AfCFTA project.