Africa: AfCFTA a Stepping Stone for Huge Investments in Africa - Songwe

#AfricaInvestmentForum2019 Johannesburg
11 November 2019

Vera Songwe, the Executive Secretary of the UN Economic Commission for Africa (UNECA), on Tuesday last week opened the 23rd meeting of the intergovernmental committee of senior officials and experts from 14 eastern African countries in Asmara, Eritrea insisting on the importance of increasing regional trade and implementing the African Continental Free Trade Agreement (AfCFTA).Leveraging new opportunities for regional integration was the theme of the ECA annual meeting/ .In the eastern trading Africa bloc, she said, the implementation of the continental free trade agreement could result in $1.8 billion welfare gains and creation of 2 million new jobs.

The New Times' James Karuhanga caught up with Songwe to talk about, among others, why the historic agreement is not just another trade agreement, what the meeting's host country - which was hosting the meeting for the very first time - has to offer, and the importance of the continent's aspirations for peace and harmony.Excerpts:

In the discussions on leveraging new opportunities for regional integration in eastern Africa, the AfCFTA keeps coming up again and you particularly emphasised that this is not just another trade agreement. Why?

Like I said, this is not just another agreement because it actually is, if it is taken right, a stepping stone for huge investment compact for the continent.

The Continental Free Trade Area Agreement is, on paper, a policy statement but I think when you translate that policy statement into actuality, it means that we need to create industries, develop infrastructure, build roads, make our airlines more effective so we can move goods from east to west and north to south.

It means we need to improve our communications so that we communicate more effectively as we trade. It means we need to improve our payment systems so that somebody from Zimbabwe can make money from Algeria. So, really, if you look at it, the sort of supporting infrastructure that is needed for the AfCFTA to work is itself a huge investment.

Each one of those strands; the infrastructure, the logistics, the communications, the shipping, the energy sector, the capacity building needed to create the kind of skills needed to manufacture the right kinds of goods, and the airlines. The agreement does not discriminate about the way we want to produce as long as it is on the continent, and we build those supply chains. And that's why I say it's not just another trade agreement. It really is an investment blueprint for the continent.

Talking about blueprints, what is the economic blueprint needed for the region to create the needed type or quality, and number, of jobs?

First of all, I think it is the right policy environment. We have a beginning; which is the AfCFTA itself. I think, coupled with that, you will need to get free movement of people to accompany that so that you get the right skills in the right place. For Rwanda, today, we have a lot of technology skills. We will need those skills also in Kenya and Eritrea so that we can develop those sectors.

You cannot really develop if you cannot speak to the other side. Right? So, we need the continent as a whole to have an equal amount of skills development, an equal model, so that you can actually move things. We put up, as you saw, a conversation around consumption which is what is driving the growth.

We are consuming a lot but our consumption is from extra continental exports. We would like to continue consuming a lot because we create demand that we would like to produce on the continent. That's the AfCFTA blueprint.

What is ECA doing to help fast track the implementation of the AfCFTA?

We are doing a number of things but I think that three more specifically, the first one is doing advocacy, explaining to people what the AfCFTA means, what it holds in terms of potential, particularly for job creation. That is a big part of it. But the second one is helping countries to create the right environment so that they can actually benefit from the AfCFTA. And the third is actually doing what we call national competitiveness strategies because when the AfCFTA actually happens not everybody will be producing the same thing.

But we'll be looking at each country and saying, 'where is your comparative advantage, where is it that you can specialize?' We are also working to support countries to find the financial resources to do the right investment. We are doing a lot of work on creating financing to help countries. For example, AfCFTA is going through a lot of energy investments because to power an industry you need energy.

So, we are supporting energy development and we are also trying to see whether we can test the AfCFTA-particular sectors. We are of course doing a lot of work on the digital space because we need to create a market that is seamless. So, we are working on interoperability and supporting the work to ensure that people can actually trade when trade starts. Those are just some of the things we are doing.

What about the peace dividend being a prerequisite for ongoing efforts, where the AfCFTA is concerned?

Well, we are here [Eritrea]. A year and a half ago we wouldn't have been in Eritrea. We would never have thought of bringing our programmes here because first of all there were no flights and now, we all flew in with Ethiopian airlines. And Ethiopian airlines were only able to fly in, I think, after the peace agreement [between Eritrea and Ethiopia] was signed and the fact that this agreement was signed has allowed us to be able to bring this conversation to Eritrea.

So, for us, we cannot talk about the AfCFTA and continental integration when one of our countries is out of the conversation. I think part of the peace dividend is that we have all our countries in that conversation.

Do you, in this regard, see Africa's project of silencing the guns by 2020, feasible? Is there hope?

We have aspirations, as a continent, and I think we are all working really hard to make sure that is possible. I think the number of conflicts on the continent has been reduced. There has been a little bit of a spike here and there but there's been, overall, when you look at where we were 10 years ago and where we are today, the continent is a much more peaceful continent.

I think that there is still a little bit more work that we need to do to totally silence the guns. But we still have a year to go so, maybe we have to still believe in the power of the possible and hope we'll be able to do it in 2020. But if we don't do it in 2020, I think the idea is that we have a target and it is a rallying cry, especially by the women on the continent, that we try to resolve our differences in a more peaceful way. So, we hope we can move to that direction much faster.

In the context of leveraging new opportunities for regional integration and factoring in the AfCFTA, what can a country like Eritrea offer?

A lot. First of all, Eritrea is the gateway to the east. So, as we work on the Continental Free Trade Area Agreement, what we want to do is have Africa produce and add more value to the goods that it exports. The AfCFTA is not just about trading within; it's also about increasing our value of the goods we export outside and I think that the proximity to the east allows Eritrea to be a connecting market to the countries in the east.

They have a port, one of the natural deep-water seaports on the continent and exploiting that deep water seaport will help with the logistics. And it has a beautiful touristic potential so it can also offer that as part of what it brings to the continent. I think there is a lot it can offer and this is why we do this national competitiveness strategy to understand what each country can bring onboard. Services; they have a very bright young population. So, they can also be a very good source economy.

How about the issue of rules of origin, and what we now see happening in West Africa with countries closing borders? How can this be fixed?

Again, I think it is partly advocacy, which ECA does a lot. We explain what it [rules of origin] means, why it's important to have rules of origin, why getting the private sector in is an important part of understanding the AfCFTA. What are the benefits and or importance of getting the rules of origin and the agreement that everybody understands and agrees with? So, our ministers of trade are working, now, to finalize the protocols around rules of origin and we hope that by the time we meet in February 2020, when the heads of state meet, there will be progress.

There is also going to be a meeting in December on the rules of origin; so, we hope that will take the conversations a step further.

Right from the beginning, the private sector's role was emphasized. How is the private sector doing to make things happen in the AfCFTA context?

The private sector, I think, was already trading the way they could before. There was regional trade happening. I think the fact that there was a policy stance saying we want to do the AfCFTA should help because we would lift all those tariff barriers and non-tariff barriers. And we hope that as we do that, we'll have more private sector coming in to take advantage of the opportunities.

How about the civil society; how important are they or what role are they playing?

They are important because we need them for advocacy. We need them to understand what this is and we need them to be able to spread the word and also to ensure and guard against misuse of the process.

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