A roundtable comprising trade experts in the public and private sectors met in Nairobi, Kenya, recently to discuss the Continental Free Trade Area (CFTA) as a catalyst to Africa's economic development.
The May 7 event was organized by the African Union Commission, the World Economic Forum and CNBC Africa. The discussions highlighted four critical issues: a 21st century trade and investment agenda for Africa; lowering tariff and non-tariff barriers; resolving the political and technical challenges in establishing the CTFA; and effective private sector engagement in the CFTA negotiations.
The African Union (AU) envisages a CFTA to be launched in 2017. Its aim is to create a single market for Africa, whose one billion people, goods, services and skills, will move freely, creating a larger, vibrant economic space for trade and investment.
The AfDB was represented by Shem Simuyemba, Chief Infrastructure Economist and Regional Integration Expert. He observed that the Bank was driving efforts to help address one of Africa's most critical challenges, which is inadequate infrastructure to support Africa's trade, economic integration and transformation.
In 2014, the Bank invested US $6.7 billion out of which 60% was in infrastructure. The bulk of these funds was in power generation and interconnectors in order to enhance power trade across Africa. "The Bank's interventions were intended to create the necessary economic infrastructure to reduce the cost of doing business, and enhance the competitiveness of Africa's intra-regional as well as international trade," Simuyemba said.
Patrick McGee of the World Economic Forum informed participants that "this is the start of series of public-private sector consultations on key issues on Africa's development such as the pan-African CFTA leading to the WEF Africa Forum to be held in Cape Town, South Africa, on June 3-5, 2015."
Panelists were unanimous that the CFTA should not just be about trade in goods, but also address issues of trade in services, movement of skills across Africa and more importantly, industrialization, which should be a key pillar of Africa's trade strategy.
A number of key measures to support the CTFA were cited. These included new generation institutions such as an African competition commission; a continental arbitration mechanism; protection of intellectual property rights, and entrepreneur development and incentives with a special focus on young entrepreneurs. Also, local content development to support African businesses to be anchored onto and benefit from major investments taking place across the continent particularly in infrastructure was mentioned as another possible solution. The need to enhance science, technology and innovation, deepening of financial markets to make is possible for Africans to invest across Africa, as well as harnessing the knowledge economy to improve technology and innovation also emerged as critical solutions.
Apart from AfDB, other participants of the roundtable discussion were Babajide Sodipo, Regional Trade Advisor at the African Union Commission: Rajesh Shah of Pricewaterhouse Coopers (PwC), who is also a member of the Kenya Private Sector Alliance (KEPSA); and Richard Kiplagat, Chief Operating Officer of the consulting firm, africapractice.
