Africa: AfCFTA Success Depends On Regional Integration of Public Good - Report

21 July 2021

The African Centre for Economic Transformation (ACET) has stated in its African Transformation Report 2021 that countries in the continent should look beyond trade and markets and collaborate in delivering regional public good.

This, it noted was to ensure the success of the African Continental Free Trade Area (AfCFTA) and achieve growth in their respective economies.

The report titled, "Integrating to Transform, stated: "But while past regional integration efforts have often struggled, Africa's transformation requires much more progress on regional integration.

"To achieve growth with depth and for the AfCFTA to succeed, countries have to look beyond trade and markets and collaborate in delivering regional public goods such as transport corridors, free movement of people, well-managed river basins, cross-border digital connectivity, and systems to control future outbreaks of pests and disease.

"These will all help tackle the three frontline challenges of jobs, innovation, and climate-- all national challenges with regional components. And in a self-reinforcing manner, collaboration to produce regional public goods will also help build experience and trust to pursue deeper regional economic integration, under the AfCFTA.

"To advance on these fronts will take dedicated leadership at all levels, starting with top political leaders and extending to government, private firms, academia, and civil society. Africa's leaders will need to promote visions that go beyond their national interest and to pursue collective action for the common good.

"Turning top-down visions into reality needs to be complemented by a bottom-up, more problem-driven approach to national and regional problems to help overcome the political economy barriers that have slowed progress in the past."

The Founder and President of the ACET, Mr. Kingsley Amoako, observed that the, "main message of the 2021 African Transformation Report is that Africa's economic transformation requires much more progress on regional integration."

Amoako also said that African countries should tackle three frontline challenges, namely jobs, innovation and climate, which could make or break their efforts to transform their economies.

He urged African countries to focus on these three areas, "because they are the ones that will shape Africa's future, and they are on every policymaker's agenda. Tackling each of them supports the transformation agenda for growth with depth, and each requires and fosters regional collaboration."

He said: "Ensure jobs for the world's youngest and fastest-growing labor force by imparting skills for work in 21st century agriculture, manufacturing and services and support digital innovation by enabling the private sector to deliver the many benefits from digital technologies in creating jobs, boosting productivity, and reducing poverty while managing climate risks by promoting climate-smart agriculture, protecting green and blue ecosystems, and exploiting renewable energy."

Amoako observed that the compelling case on the potential of regional integration to accelerate economic transformation is attested to by the reliance of Sub-Saharan African economies on importation of inputs for manufacturing and the dearth of large domestic markets that would provide their manufacturers with some natural protection from imports.

He, therefore, stated that, "integrating national markets into larger regional markets would thus help countries overcome these disadvantages and seize opportunities to transform their economies."

Amoako noted that, "African economies must now rebound quickly with transformative and forward-looking policies that embrace regional integration."

The report stated that the logic behind its definition of economic transformation as growth with depth was based on the need to diversify African economies, orientate them for competitiveness in export markets, increase their productivity, and achieve technological upgrade and human capital development.

It said: "African countries, most of them relying on a narrow range of commodity exports, need to diversify the array of goods and services to hedge against external and internal shocks.

"Their exports, if competitive will allow them to exploit their comparative advantage to generate higher incomes, which will help pay for the investments in skills, capital, and technology needed to solidify their comparative advantage over time.

"Productivity gains, starting in agriculture, will allow agriculture to release labor to industry and services, produce more food to moderate hikes in urban industrial wages, supply raw materials for processing in industries, increase exports to pay for transformation inputs, and enhance the domestic market for industrial products.

"While technological upgrading will sustain rising productivity and enables transforming economies to produce goods and services that command higher prices on global markets."

The report added that, "increasing incomes per capita and employment, together with health and education, as well as peace, justice, security, and the environment will help to improve human well-being and will have feedback effects of productivity and growth."

According to the Former President of the Republic of Liberia, Mrs. Ellen Johnson Sirleaf, who is also the Chair of the Transformation Leadership Panel, established by ACET in 2019, noted that a successful AfCFTA would be a way to reinforce the badly needed integration in Africa, and said: "Now is the time to reinforce the push for African integration, not just through trade, but also through greater collaboration to provide regional public goods. Only then will Africa see its economies transform and develop the leadership and institutions to build the Africa we want."

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