During a two-day Africa Continental Free Trade Area (AfCFTA) regional Trade Forum on the Horn of Africa, the European Union (EU) has pledged it will grant Africa with EUR 40 billion to help create 10 million jobs.
Ambassador Ranieri Sabatucci, head of the EU delegation to the African Union, while addressing the trade forum on Thursday said that EU fully supports AfCFTA and proposes to provide EUR 40 billion grant packages to attract investments into Africa that would create millions of jobs.
According to Ambassador Sabatucci, the proposed grant is part of the comprehensive agreement to create a continent-to-continent long-term relations. He referred to Jean-Claude Junker, President of the EU, who last year said that EU and Africa will have a long-term free trade agreement.
In the wake of countries ratifying AfCFTA with Gambia being the 22nd nation ratifying it to qualify for implementation; local businesses are claiming that African governments are converging on subsidized imports of merchandizes resulting in crowding out effects.
During the trade forum which specifically focused on Africa's pharmaceutical sector, Ali Mufuruki, chairman and CEO of Infotech Investment Group, who co-chairs the Afro Champions Club, said that "Since Africa doesn't own its health care agenda; foreigners are coming with a long-term strategy to remain a supplier of the continent's needs." He urged both governments and private sectors need to reorganize themselves as the health care potential is untapped. However, much of the heath care products are imports with sizable subsidies sidelining homegrown businesses from the business, Mufuruki said.
Vera Songwe (PhD), executive secretary of United Nations Economic Commission for Africa (UNECA), substantiated that Africa "consumes less than two percent of the medicines while it imports 70 percent of its needs from outside of the continent at an annual cost of USD 14.5 billion." The annual importation cost is projected to climb further to around USD 260 billion by 2030, Songwe said. Mufuruki added that Africa is losing USD 80 million worth of its healthcare resources per day and realize the need to work together to that end requires dealing with border issues, standardizations and conflicts.
To reduce dependence on imported medicines, the African private sector is requested to collaborate and get set to promptly exploit opportunities AfCFTA could offer. The likes of Egypt which have a well-established pharmaceutical industry and Ethiopia's export of medicines to Djibouti were showcased during the forum.
Since April this year, 22 countries have deposited their ratifications and as of May, AfCFTA has secured the threshold to enter into force with the coming July witnessing the formal launch of AfCFTA in Niger.
As of 2018, 52 countries have signed the agreement which is believed to increase intra-African trade by about 52 percent, and is expected to remove tariffs on 90 percent of goods traded in 2022. However, with its infant manufacturing and underdeveloped industries, many onlookers argue Africa will be challenged in making the best out of the continental trade agreement.
Mamo Mihretu, chief trade negotiator and senior policy advisor to the Prime Minister, told the forum why Ethiopia decided to join AfCFTA. Ethiopia considers the continental trade agreement as a pan-African instrument with a prosperity agenda. He said that Ethiopia certainly has its own economic interest in neighboring countries where it has less than 20 percent of the export market.