Inside Africa: The Economic Booster for Africa
Eric Lafforgue/Art In All Of Us/Corbis
The African Union (AU) is looking to bring all but one of the continent’s countries together to boost trade and establish a sustainable, more stable economy overall. Agenda 2063 provides the AU with a guide to implementing projects and policies to help Africa become a “global powerhouse of the future.” It establishes priorities, looking closely at infrastructure, education, science, technology, arts, and culture in order to push forward with development in these sectors. Among the flagship programs of Agenda 2063 are a integrated high speed train network to facilitate movement of goods and people all over, developing the Grand Inga Dam Project to provide a new source of power, establish the Great African Museum to promote cultural heritage, and the African Continental Free Trade Area (AfCFTA), which was set to be launched July 1, though the COVID-19 pandemic could cause some delay in the actual implementation.
Once AfCFTA is fully implemented, it will be the world’s largest free-trade area, encompassing 53 of the 54 countries in the region have signed up. Eritrea, which has a notoriously oppressive government, is the one country to not and remains generally isolated. Among the participating countries, cross-border tariffs on almost all African-produced goods will be lowered or eliminated entirely. The hope is that by doing so, the region can see a greatly improved market in which capital and people will be able to move freely. It is estimated that intra-Africa trade could increase by 52% in the first year. Currently, Africa does not see the same kind of internal trade that many regions world-wide see. Internal trade only makes up 15% of total trade as opposed to 58% in Asia and 70% in Europe. If Africa hopes to stabilize its own internal economy and be less reliant on outside markets, it needs to look inward.
Some regions within the continent have already seen it. Regional trade agreements have been made in the past. In West Africa, 15 countries have come together to form the Economic Community of West African States (ECOWAS), established in 1975 through the Treaty of Lagos in order to “foster the ideal of collective self-sufficiency for its member states.” There is also the Southern African Customs Union, which is made up of five countries in Southern Africa, with a similar goal. Agreements like these and AfCFTA do much to boost regional trade through policy cooperation, which can promote healthy economic growth that protects local economies. AfCFTA could be exactly what Africa needs to blossom. Done correctly, the African economy may become much more protected from fluctuating world markets impacted by many outside factors, one example being the COVID-19 global health crisis.
AfCFTA was meant to be fully implemented this July, however, COVID-19 struck and many countries all over the globe find themselves scrambling to balance public and economic health. Borders are closing to contain outbreaks and businesses are closing their doors. In May, the International Monetary Fund predicted a loss of about $200 billion in income for the region. The budding economy in the region could potentially have been set back by several years because of the pandemic. The region currently relies on exports to Europe, which Secretary General of the AfCFTA Secretariat Wamkele Mene said makes up more than half of Africa’s exports. If European countries are struggling with the pandemic, then Africa will suffer though post-COVID economic recovery and AfCFTA’s full implementation will have to wait until the health situation settles to some extent. Mene told Africa Renewal that “We would like to resume our work as soon as the pandemic is contained. But if for whatever reason, the pandemic continues, which we hope it will not, we are exploring other ways of advancing our negotiations.”
Some suggest that the delay in full implementation could provide time for some of the kinks in AfCFTA. Not all of the 53 countries that signed up to be a part of the free-trade area have actually ratified the agreement. Mene said that he hopes that the pandemic and the economic downturn that came with it encourage these governments to ratify, adding that AfCFTA has been the “fastest ratified trade agreement in the African Union because countries recognize the importance of an integrated market as opposed to isolationism and autarky.”
One could argue that not all countries are completely prepared to become part of a massively integrated market. The AfCFTA Year Zero Report by the AfroChampions Initiative, completed even before COVID-19, found that commitment to and readiness to implement AfCFTA was below 50% and there is not much of a chance those numbers have improved in the middle of the pandemic. The report ranked countries by their level of commitment, their level of readiness, and their combined scores in both categories.
Rwanda was reported to be the most committed while South Africa was found to be the most ready to implement. South Sudan was the least prepared, and, unsurprisingly since it did not sign up to be a part of the free-trade area in the first place, Eritrea was ranked last in commitment. Most of these scores remained below 50%,some of the issues being weak trade-related infrastructure in the several countries working to rebuild post-conflict. There is also the worry that countries like Tunisia, Morocco, Algeria, and Libya are ranked low on the commitment scale. These Northern Africa countries hold important economies that could only strengthen AfCFTA, though there is a lack of support for free movement of persons that leads their commitment to the agreement to be questioned.
Especially in regards to infrastructure, one could argue that ratifying the agreement could be beneficial and lead to improvements. The money that could potentially enter into the local economy through the increased trade could support future projects. The counter-argument would be to question a country’s ability to facilitate increased trade on unreliable and ill-maintained roads, though AfroChampions suggests this is not a reason to not move forward with the agreement. Ratified AfCFTA could the booster Africa needs to stabilize its economy and promote self-sufficiency from the foreign markets it has relied so heavily on for years.
