Inter-African trade excessively increasing, forecasts Secretary General of African Continental Free Trade Area for upcoming half decade.
The objective is to stimulate financial growth, trade among African countries, and investments across the continent. Despite being established in February 2020, implementation of the agreement has been sluggish. Generally, African countries trade more with foreign nations than among themselves. Inadequate infrastructure, insufficient financing, and poor governance are frequently cited as culprits.
This week, leaders from the African private and public sectors will convene in Kigali, Rwanda, for the second instalment of the AfCTFA Business Forum, known as Biashara Afrika, to discuss the challenges and prospective benefits of the free trade area. Prior to the meeting, CNN's Eleni Giokos spoke with Wamkele Mene, the AfCFTA Secretary General, about overcoming these obstacles.
The conversation that follows has been condensed and clarified for clarity and conciseness.
Eleni Giokos: When you assumed the position of Secretary General, did you anticipate it would be this daunting to establish numerous standards across the continent, and what was the most difficult aspect of pulling everything together?
Wamkele Mene: I believe nobody could have imagined how difficult and large-scale the task was. One of the challenges that make it challenging and will continue to be challenging for a long time is our fragmented market. We have 47 state parties to the agreement establishing the AfCFTA. We hope the remaining countries will ratify soon. Within these 47, we have 42 currencies. We have countries with a GDP per capita of $110, and then on the other end of the spectrum, one with a GDP per capita of $25,000. We have the least developed countries, landlocked countries, and countries with differing macroeconomic policies. Integrating and creating a single market is incredibly difficult when you have such diversity.
EG: How has AfCFTA progressed since its inception, given that it’s been introduced on the continent?
WM: We were established in the midst of the Covid-19 pandemic in February 2020. March 2020 was when the entire African continent shut down – closing of borders, closing of airports, and so on. For the first six to nine months of the year, it was nearly impossible to accomplish much.
Now, we have completed all the protocols of the agreement – that is, the legal framework – including tough areas like digital trade, rules of origin for local content in textiles and clothing, and automotive sectors, as well as creating a dispute settlement system for an entire continent of 47 countries trading under the AfCFTA. These rules are the fundamentals of trade, and I am pleased that we are now moving from negotiating these rules to implementing them.
EG: In 2022, seven countries selected to pilot the African Continental Free Trade Area. How is it progressing, how is it being implemented, are you seeing fruitful outcomes?
WM: In 2022, seven countries were prepared. By "prepared," we mean they put in place the necessary customs systems, they integrated the AfCFTA into their national regulations. In October, 37 countries will be ready to trade under the rules and benefits.
EG: Many in the private sector say they don’t feel the effects of the African Continental Free Trade Area. They argue that it’s not functioning effectively. What is your response to that?
WM: We are integrating a market of 47 countries. The private sector is essential to the success of market integration on the continent, and it is responsible for driving trade. What I would say to them is that we are breaking down 60 years of market fragmentation. It will not happen overnight. We have taken inspiration from the European Union, which is widely regarded as the most successful market integration model in the world today, yet it still faces challenges, 31 years after its establishment.
EG: Aliko Dangote has spoken about the fact that he needs 35 visas to travel across the African continent. If the wealthiest man in Africa cannot move freely, who can? How does this impact cross-border business?
WM: It is a formidable barrier and limitation to intra-Africa trade and investment. As of now, only four countries have ratified the African Union's protocol on freedom of movement for people – just four. There is strong resistance to encouraging the movement of people in some countries due to emotional, or in some cases, legitimate national security concerns. We have to work diligently to persuade countries to adopt the same approach to free movement while taking into account their national security concerns.
EG: Can we even have this conversation about integration if we do not prioritize the development of infrastructure that connects the continent?
WM: More infrastructure investment is required to enable Africa to have the infrastructure necessary for goods to move through borders smoothly, efficiently, and according to the agreed-upon rules. We anticipate the imminent operationalization of the Lobito corridor (a railway project connecting Angola, Zambia, and the Democratic Republic of Congo). We look forward to these trade corridors built on world-class infrastructure to significantly improve intra-Africa trade.
It ain't just about the trade regulations, it's about setting up the supply chain connections, the transportation and logistics setup that will foster trade.
EG: Five years from now: What sorta chat do you reckon we'll be havin' 'bout our situation?
WM: I'd wager that the knowledge I've gathered from these past four years has taught me the need for extreme patience. If we can bump up intra-Africa trade from like 15% to 25% or maybe even 30%, in five years, that'd be a major victory.
I reckon we could even double intra-Africa trade in the next five, as long as we bring in the appropriate tools. So, I'm sayin', we need to sort out payment systems, make it easy for folks to send money across Africa, especially in the trade routes between Central, Eastern, and Northern Africa. Then, we've gotta have the infrastructure to support trade, especially in those crucial trade corridors. Lastly, we gotta have that political will and the trade agreements negotiated to set up the single market. I reckon we'll make it.
Back in '18, plenty of folks, even on the African continent, were chattin' that these Africans will never stop negotiatin' and the AfCFTA won't ever get signed. Then of course, the AfCFTA got signed in Rwanda that same year. They said it wouldn't get ratified, yet a year later, it did – now 47 countries got it ratified. Now they're sayin' it won't get implemented. In October, 37 countries'll show how it's done by showin' off the goods and trade certificates they're exchangin'. At every milestone, it's like we're movin' the goal posts.
The AfCFTA Secretary General, Wamkele Mene, mentioned that one of the challenges in integrating and creating a single market under the AfCFTA is the diversity among African countries. They have 47 state parties to the agreement, 42 currencies, countries with vastly different economic levels, and varying macroeconomic policies.
Furthermore, Aliko Dangote, the wealthiest man in Africa, highlighted the challenge of obtaining multiple visas to travel across the continent, which is a significant barrier to cross-border business.
