The African Continental Free Trade Area (AfCFTA) is now a low hanging fruit but the political will is now what’s left for it to be a success. It has been almost two months since the AfCFTA agreement became effective on January 1 this year.
According to United Nations Economic Commission for Africa (ECA) estimates, the AfCFTA is expected to increase Africa’s industrial exports by more than 50% over a period of 12 years.
Senior Expert and Advisor, Customs at AU Commission Willie Shumba told a Zimbabwe Economic Society monthly virtual meeting entitled, ‘AfCFTA: Opportunities & Challenges for Zimbabwe’ that trade is a powerful engine for economic growth and development.
However, Africa’s role in the global trade market has been providing raw commodities in exchange of manufactured goods, thereby capturing a minimal 3% of the global share of trade. In addition intra-Africa trade is just 15% of its total trade, compared with 19% intra-regional trade in Latin America, 51% in Asia, 54% in North America and 70% in Europe.
“The low level of intra-African trade can change if Africa effectively addresses supply side constraints and weak productive capacities, infrastructural bottlenecks, trade information networks, access to finance for traders and other economic operators, trade facilitation and trade in services and free movement of people,” he said.
The AfCFTA seeks to combine the economies of 55 African states under a pan-African free trade area comprising 1.35 billion people in a market with a combined GDP of $3.4 trillion.
In February 2019, National Assembly Speaker Jacob Mudenda told a workshop on AfCFTA that while trade is the biggest driver of economic growth, there is need for the country to make use of the treaty as it will support economic diversification, industrialization and development.
At that time the treaty was yet to be ratified by the southern African nation seven years after its signing. But as at 22 February 2021, 36 countries including Zimbabwe had ratified to the agreement.
Mudenda said the key to the ratification was political will.
“This is very important because if we are not inclusive in our approach to this free trade agreement, there might be some discord. If we do not gear ourselves up for this economic integration process, Zimbabwe will lose out on this palpable and extensive continental market. Therefore it is necessary that a National Consultative Framework to be established, must embrace business, labor, government and civil society organizations.”
The AfCFTA will initially focus on five sectors for trade in services, namely, transport, communication and banking as well as tourism and business services. The next step is to negotiate and agree on the levels of market opening in those services sectors, which means Africa can have an integrated services market covering those areas.
This is a priority for Africa because services contribute on average to over 50% of national outputs and more than 60% of value addition on raw materials, create three other jobs for every one job, constitute essential social services, and equip enterprises and economies to benefit from the fourth industrial revolution.