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Africa Made History By Establishing A Continental Free Trade Area

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Africa Made History By Establishing A Continental Free Trade Area
free trade area is a great move by African leaders.

AFRICANGLOBE – ‘Africa cannot just remain a story, about huge potential that never materialises. Something has to give’ – Paul Kagame, President of Rwanda and Chair of African Union Reforms.

Other than the creation of the organisation of African Unity and the decision to strengthen it as the African Union, the signing of the African Continental Free Trade Area is arguably the third, most important milestone in post-independence Africa.

It was made possible by historic, remarkable leadership in 56 years of existence of the African Union, and for that I believe that I speak for most of Africans when I give thanks to the leaders of today’s Africa; to quote former South African president Thabo Mbeki: ‘Today, it feels good to be African!’

There are two types, maybe three of African statesmen: Those who mind their national business throughout their tenure; those who promote interests of the West in their own countries and across the continent and then there are the Pan African Comrades: those inhabited by a continental mission.

I am going to surprise many in saying that this historical feat is the achievement of ALL of them; without exception! Well done African leaders; All of you!

Many Pan-African leaders attempted such a game-changing coup through the years, but it somehow wasn’t the right idea, the right approach or the right moment; it all seemed as though the stars were not aligned. This time it’s a done deal: The AfCFTA has entered into force!

All the efforts, big and small to integrate Africa and secure its prosperity were systematically frustrated — we all remember when East African nations were threatened with an embargo because they dared reject hand-me-down clothing.

Yet, interest margins were insignificant for the mighty country, but significantly dignifying for the East African people. Some rich and powerful country across the ocean punished a small and poor country for refusing to wear clothes that had been first worn by its people.

Fearing the wrath of the mighty nation, most East African nations walked back the noble decision — and accepted anew to dress their citizens with outfit that had first been worn by other people.

This anecdote aims to remind us that the fight isn’t over. We have slain a devilish beast born in Berlin, Germany in 1884! Today we celebrate; tomorrow we continue the fight. Next you will hear the 0.2 levy on eligible imports necessary to fund our Union, which in reality is so insignificant to affect global trade being opposed by crooks of all kinds.

After that, it will be some Africans conspiring to ‘reimport’ products not made in Africa and stamping them as locally made to circumvent AfCFTA rules.

But again, today we celebrate! We celebrate African leaders for having resisted the pressures, we know it wasn’t easy. We celebrate the CFTA champions who knew how to keep the momentum, galvanize adherence of every single country and appease ideological differences.

In reality, we never doubted you. And I am only mentioning those threats; I don’t believe they will occur, I know you will resist them!

It is common knowledge that Africa is a reservoir natural resources, yet what sets the continent apart is its demographic dividend. Africa is a youthful continent. The youth however, needs access to factors of production: skills, access to finance and markets, a conducive policy and tax environment.

As a continent, Africa faces three major bottlenecks to its economic upsurge: poor integration, deprived infrastructure and unskilled labour. All three can be addressed by concerted political will.

The intra-African trade is not optimal. While in regional blocs such as East Africa, trade averages 26 percent, at par with Southeast Asian countries, in regions such as northern and West Africa, trade among countries remains below the 5 percent mark. The Continental Free Trade Area ( AfCFTA) will expand the market to 1.2 billion people.

The second bottleneck of infrastructure will be mitigated by strategic investment by states and financial institutions in roads, railways and power lines. The third bottleneck – the skills gap, will be responded to by heavy investment in human capital.

How will all this be funded, one might ask? Economic diversification and policy reform in many African countries have played a great role in preventing capital flight from the African continent and attracting foreign direct investment.

Illicit financial flows from Africa represent between 50-150 billion USD, which is the sum of FDI and ODA for most African countries’ – more than enough to bridge the continent’s infrastructure gap (F. NDiaye, discussion paper, 2018).

Funds are available, but they are risk averse. The job of Pan-African financial institutions such as the African Development Bank, or Africa based private equities such as ‘South Bridge’, is to minimise risk in African projects and bring them to bankable scale.

Growth has to be inclusive to avoid inequality and social exclusions. Africa is grappling with labour, rural and financial paradoxes. Economic growth is only a means to economic transformation; moving up the ladder for global value chains and creating jobs.

To enhance access to finance we need financial inclusion, better fiscal policy enabling SMEs to access micro-credits at preferential rates. All over the world, it is Small and Medium Enterprises (SMEs) and family businesses – not mega-companies and multinationals that have been the early engines of growth.

This will be made possible by the  AfCFTA launched today, with the potential to create a wide African middle class and vibrant internal markets, not least, by increased productivity in agriculture: No country has developed without operating a green revolution. For the same piece of land, with the same man-hours and the same crop, does the African farmer achieve optimum harvest, compared to, say his Vietnamese counterpart? Once harvested, does the same produce create optimum jobs and optimum returns?

Several factors come into play, including ploughing, seedling, irrigation, fertilising, harvesting, storing, transporting, processing, marketing, etc. For instance, the usage of fertilizers is eight kilograms per year per person, compared to the average of 88KG/Y/P worldwide. Growth in agriculture will also avail funds to invest in other sectors.

To conclude, it takes more than a generation, if ever, for a continent to be blessed with such auspicious leadership. It is not one leader, it is a complementary team. In football they call it a ‘golden generation’.

In my decent study of history, I am convinced that Africa is enjoying the golden generation of leadership, perhaps in its entire history and we are privileged to be witnessing this. Today is the day we to stop thinking ‘country’ and start thinking ‘Africa’ as a whole. African leaders, we salute you!

 

By: Gatete Nyiringabo Ruhumuliza

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