21 March 2018

Africa Govts Urged to Set Up Hubs to Reap From Trade Treaty

African governments and the private sector have been urged to produce goods for trade that are competitive not only in the continent but also globally if they are to benefit from the African Continental Free Trade Agreement (AfCTFA).

Li Yong, the Director General of the United Nations Industrial Development (Unido), says the the signing of the Continental Free Trade Area (CFTA) can only be a boon to the continent if individual governments support industrialisation by producing value added products.

"Signing CFTA will not mean countries will automatically benefit, the governments have to have a vision to promote industrialisation, and countries need to make sure the goods produced are tradable," said Mr Yong at the sidelines of the ongoing African Union summit in Kigali.

Economic hubs

Experts say the pact could yield meaningful wealth creation for the continent by setting up economic hubs that capitalise on the countries comparative advantages, where certain countries will be hinged on to produce certain specialised goods and services to be consumed beyond the African market.

"We need to create wealth in Africa and keep a big chunk of this wealth. We can leverage on the countries comparative advantage and build hubs for the different sectors," said Samba Bathily, the CEO of the African Development Solutions Group and co-founder of Afrochampions Initiative.

According to IMF, Africa's manufacturing sector has remained subdued, hovering consistently around 10 per cent in the past decade. Among the key factors hindering industrialisation is inadequate infrastructure in power, water, and transport services that would allow firms to thrive in industries with strong comparative advantages.

Analysts are calling upon countries to prioritise fixing industrial infrastructures to avoid having an AfCFTA that supports imported products.

"One thing Africans are good at is spending elsewhere especially when it comes to critical sectors; for a good education, health, tourism, many go abroad," Mr Bathily said, adding that by setting up hubs in the continent "we shall be able to integrate our infrastructures and get these goods and services in Africa."

Foreign firms

Governments have also been warned on overreliance on foreign firms for infrastructural contracts in roads, railways and fibre optics.

"Many of the big projects in Africa are executed by big multinational companies, from China, Europe and elsewhere, this needs to change if Africa is indeed to benefit from AfCFTA," added Mr Bathily.

He said AfCFTA will open up many structural opportunities and therefore Africa needs to build capacity for its firms to carry out these projects.

So far more than 40 countries have committed to signing the AfCFTA on Wednesday in Kigali, an agreement that could see Africa creating the world's largest free trade area.

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