Cairo — Africa is set for massive transformation as more countries are expected to sign-up and ratify the African Continental Free Trade Agreement (AfCFTA) in 2019, says Economic Commission for Africa's David Luke, Coordinator of the ECA's African Trade Policy Centre (ATPC).
Mr. Luke, who recently led an ECA delegation to the Intra-African Trade Fair that was held in Cairo, Egypt, said intra-African trade, free trade and investments catalyzed by the AfCFTA will without doubt transform the African continent.
He said implementation was key to the AfCFTA's success once it is ratified by enough countries. At least 22 countries should ratify the historic agreement for it to go into force.
"Getting the AfCFTA right will depend on getting the level of ambition that we have as a continent," said Mr. Luke, adding the ECA had recently carried out an assessment of the AfCFTA modalities on goods to support the process as more countries are expected to sign and ratify the agreement in 2019.
"The findings demonstrate that a double qualification approach to liberalize trade in goods under the AfCFTA would generate larger trade-related benefits for African countries than a tariff line approach," he said.
Liberalizing trade in goods within Africa using a double qualification approach would also support Africa's industrialization process, since it ensures that intermediates are liberalized early, and therefore rapidly utilized as relatively cheaper inputs towards value addition, Mr. Luke added.
The ECA's analysis also clearly illustrates that African countries should keep their exclusion lists to a minimum in order to maximize the trade-related gains.
"Indeed, any excluded list greater than 1 percent of the total tariff lines under a tariff line approach, or 3 percent under a double qualification approach, would be expected to bring insufficient trade-related benefits to African countries," the ACPC Coordinator said.
"If the AfCFTA is to be the real game changer for African economies that we all hope for, we must be ambitious and we must not delay."
Beyond tariff liberalization
Although, tariff liberalization under the AfCFTA can go a long way to addressing the important demand side constraints to trade, particularly those linked to market size, supply side constraints to intra-African trade and investment cannot be ignored, he said.
Border-related and local distribution deficiencies, such as corruption, expensive settlement payments, cumbersome customs requirements and inefficient services, significantly increase the costs of trade and investment transactions on the continent.
"This is why African policymakers made an active decision for the AfCFTA to not only target a reduction in intra-African tariffs, but also an improvement in Africa's business environment," said Mr. Luke, adding public-private sector dialogues were crucial for bringing the sometimes distant views of African policymakers and industry leaders together to drive the development of the continent.
At the IATF Mr. Luke and other ATPC officials participated in a number side meetings and panel discussions in which they showcased work being done by the ECA to support member States in a number of areas, including the AfCFTA processes.
In one high-level panel he was joined by panelists, including Ahmed Mansur, Group Chief Executive Director of the Dangote Group; Simon Tiemtore, Chairman, Vista Group; Paulo Gomes, President, Constelor Holdings; Emma Wade-Smith, Britain's Trade Commissioner for Africa; and Sanjeev Gupta, Executive Director, Financial Services, Africa Finance Corporation. They all agreed that implementation was key to the AfCFTA's success.
