The African Continental Free Trade Agreement (AfCFTA) will bring down trade barriers on the continent, harmonise trade regulations in all member states and in so doing create the largest single market in the world
By Professor Patrick Utomi
The launch this week of the 2022 Africa CEO Trade Survey Report 2022, commissioned by the Pan-African Trade and Investment Committee, was instructive for a number of reasons. The idea that we are now actively seeking the views of our enterprising men and women who provide the goods and services on which we rely is itself worthy of note. In the past, policy makers opted to operate without this context, with predictable results and so we must celebrate all involved for providing this critical angle to the all-important task of supporting businesses, boosting trade and ultimately improving lives and livelihoods on the continent.
The results of the survey themselves paint an interesting picture. It will come as no surprise that African CEOs are slightly apprehensive about the future. Operating in the long shadow of the pandemic, shaken by disruptions in delicate global supply chains, spooked by war and faced with a possible recession, only 50 per cent of CEOs surveyed said they felt confident about the future, a lot less than the 93 per cent who were confident about 2022 when they were asked in 2021. Dependant as we are on the outside world for much of what we consume, it is little wonder that these global crises are literally felt in our kitchens. We cannot carry on like this.
This is why the confidence that CEOs have in the African Continental Free Trade Agreement is so heartening. When fully implemented, the AfCFTA will bring down trade barriers on the continent, harmonise trade regulations in all member states and in so doing create the largest single market in the world. The benefits from this would be incalculable. Our combined strength will make us an infinitely more attractive destination for investment, encourage value addition and according to the World Bank, raise incomes on the continent by 7 per cent and lift as many as forty million people out of poverty.
This is doable but it means that we have to listen closely to the people who run the businesses, especially the SMES on the continent, address their concerns, anticipate their needs and build an environment that spurs innovation and rewards their hard work. Thankfully, there are important clues in the report that can guide us. What CEOs are telling us is that they need a lot more information – and readily so – about the opportunities of AfCFTA and also about one another. They need facilitation of cross border trade, along with payment systems, that will enable them to take full advantage of trade area. They also need better trade infrastructure and logistics so they can, for example, move their goods from Lusaka to Abidjan as seamlessly as possible. And it goes without saying, they need policymakers across Africa to move quickly to realise this dream that finally seems tantalisingly within reach, almost six decades after decolonisation.
So those are the things we need to do. First of all, we must recognise the preponderance of micro-small and medium sized enterprise in the continent’s commercial landscape. A vast majority of the companies operating in Africa employ less than five hundred people and have less than USD 1 million in annual turnover. This recognition must inform the policies that we make, as we seek to support growth and investment. These companies, often run by women and people, are notoriously starved of capital which handicaps their expansion and compromises their sustainability. We will need to find creative ways to make long term capital to them. We will also have to assist them to achieve quality and standards compliance, improve packaging and gain access to lucrative markets.
Given its nature and objectives, cross-border transactions, payments and ease of movement will be critical to the AfCFTA. This means we must move quickly to formalise cross-border trade, assuring traders of the safety, security and enforceability of transactions, while also facilitating the free movement of people and disencumbering customs processes. I am encouraged by the launch of the Pan-African Payment and Settlements Systems (PAPSS), a home grown system through which traders can make and receive payments across currency lines. In addition, governments also need to invest in trade-enabling infrastructure, such as roads, ports and warehousing.
Information, as indicated by survey respondents, will be essential to this enterprise. Entrepreneurs are, rightfully, enthusiastic about the AfCFTA and the prospects that it represents. But they will need to be armed with as much information as possible so they can fully participate. A one-stop shop, such as the African Trade Gateway, a digital platform developed in partnership with Africa Export-Import Bank, is exactly the type of innovation that entrepreneurs will need and must be encouraged to harness in their quest for information.
Ultimately, a shared purpose and sense of dedication will be required from all of us for the success of the AfCFTA. After decades of trying, we are now truly on our way to a building a common market, achieving self-reliance and fundamentally transforming the nature of our economies. We can’t do this, however, without the entrepreneurs up and down our continent. We must listen to them, work with them and achieve our goals together.
Professor Patrick Utomi, Chairperson of the Pan-African Private Sector Trade & Investment Committee (PAFTRAC).