4 December 2018

Africa: 'AfDB Will Give 5 Million U.S. Dollars for the African Continental Free Trade Area'

interview

Moono Mupotola, Director for Regional Development and Regional Integration at African Development Bank (AfDB)

Of what importance is this conference a few months after the creation of the African Continental Free Trade Area?

As you rightly pointed out, after the launch of the African Continental Free Trade Agreement, it is very important for us to use this as a platform to discuss ideas on how the Agreement is going to be implemented. That is very important for us as we put together our support for this free trade deal. We also have to get former academics, people who write and experts on the subject on what they think and what the Free Trade Agreement can achieve. As I said much earlier, we are in the process of putting together a package of support of 5 million US dollars to the African Union to support the implementation of the African Continental Free Trade Area. We are using this platform to actually inform people on the content of the package and most importantly to also start developing literature around the African Continental Free Trade Area. We need this information in the work we do as the African Development Bank. When we have dialogues with our countries (policy dialogue), we try to play an advocacy role in ensuring that countries come on board. Only 49 countries have signed but we will like to have more countries to come on.Ratification is also the key. So, some of the ideas that will be coming from this conference will be used as our advocacy.

As at now, what are some of the obstacles you need to break to concretely put in place the African Continental Free Trade Area?

The first is supporting the Africa Union in getting the ratifications so that we meet the threshold of 22 countries. So, part of what we are doing is working closely with the AU in advocacy in getting the ratifications. We think in the next couple of months, by March 2019, we should have had the 22 countries, then kickstart the Free Trade Area. When we start seeing the demonstrative effects in countries that have signed, it will encourage others to join. In essence, the first step is getting the ratification in place. The second step will be how to support countries that do not have the capacity to implement some of the provisions. We will do an assessment and some of the money we are providing to the AU will be used to build the capacity of those countries. The third one is really the institutional framework. The African Continental Free Trade Area is still happening in the backroom. We need people and support to try and make sure that what countries have signed to is actually being monitored, and to some degree implemented. So, part of our support will be to institutionalise the African Continental Free Trade Agreement. Only then will it bring forth this special leave we are trying to draw in foreign direct investment on the continent to ensure that we have the right institution that will support the African Continental Free Trade Agreement.

What can be the role of industrialization in the African Continental Free Trade Area?

Africa has a very small market. In order to drive Foreign Direct Investment (FDI) unto the continent or even intra-African FDI, we need larger market. So the African Continental Free Trade Agreement creates regional markets. Now, as a bank, we go as far providing support for infrastructure for connectivity - ensuring that the continent is joined together, looking at the road and IT networks. We also look at it from the energy perspective. Energy is a very big input for industrialization. Right now, Africa's production capacities are very low when you compare with other countries. Well, that is because our costs of production are very high, including high cost of energy. Our firms are using generators instead of electricity. So, we can't compete globally or within Africa. Even if we open up, it doesn't automatically mean that we shall start trading. If its cheaper to buy from outside, people will still go outside. So, we need to bring down the cost of production so that we are competitive enough to trade within ourselves. I see us looking at insdustrialisation from the perspective of opening up big markets, infrastructure, connectivity across the continent and how we can utilize talents on the continent to actually build our industry.

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