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Pandemic throws doubts on progress of Africa trade pact

China Daily | Updated: 2020-07-13 10:35
A croupier wearing a face mask and a face shield waits for clients at a roulette table at a leisure and casino complex in Johannesburg, on July 3. MICHELE SPATARI/AFP

ADDIS ABABA, Ethiopia-As African countries brace for the upcoming trading regime under the African Continental Free Trade Area Agreement, or AfCFTA agreement, uncertainties are looming as to whether the pact can deliver as expected amid the economic perils exacerbated by the COVID-19 pandemic.

The AfCFTA, which was launched in March 2018 in the Rwandan capital, Kigali, has garnered 54 signatories, offering a new hope and continental exhilaration in terms of boosting intra-African trade, and eventually facilitating Africa's development and industrialization.

The United Nations Economic Commission for Africa, or UNECA, says that once the African free trade accord comes into force it has the potential of boosting intra-Africa trade by more than 52 percent by 2022.

The AfCFTA agreement was meant to come into force this month, but its implementation was postponed due to COVID-19, and experts and analysts are now expressing their doubts whether the African continent could benefit from its ambitious flagship initiative.

Costantinos Bt. Costantinos, an economic adviser to the African Union, or AU, and UNECA, said the AfCFTA, which was officially launched by African leaders in Niamey, capital of Niger, on July 7 last year, has the potential of "injecting groundbreaking momentum" for advancing intra-Africa trade.

However, countries should brace for the realization of "enabling factors" that are deemed necessary for the effective implementation and success of the free trade deal, such as infrastructure connectivity, lifting of economic barriers on cross-border trade, and adjustments to national economic strategies and policies, he said.

Costantinos, who is also a professor of public policy at Addis Ababa University in Ethiopia, singled out infrastructure connectivity as the mainstay of improved trade and economic integration in Africa, warning that failure to bring about efficient infrastructure integration would cost the continent the success of major AfCFTA aspirations.

As countries set to start trading under the AfCFTA, the AU also recently warned that "the time frame is tight and the stakes are high".

'An African solution'

The Institute for Security Studies, an African nonprofit organization, also cautioned African governments and pan-African organizations to carefully analyze global lessons and think beyond short-termism to effectively tap into the AfCFTA.

"While the agreement is lauded as an African solution to African problems, it is worth remembering the pitfalls of those who have traveled a similar journey and to avoid the same mistakes," it said. "This is even more important as trade agreements worldwide show signs of unraveling."

In recent years African countries have been urged to harness the potential of the AfCFTA so as to withstand ominous global trade and economic scenarios attributed to growing protectionism sentiment.

Antonio Pedro, director of the UNECA Subregional Office for Central Africa, stressed the need to tap into the AfCFTA as "a much more dependable" option to realize Africa's major economic development and industrialization aspirations amid growing pressure on multilateral platforms.

"At a time when global trade is characterized by much uncertainty and when the rest of the world is becoming increasingly inward-looking, it's good that Africa unites under the AfCFTA and leverages the plentiful opportunities available within the continent," Pedro said.

AU Commissioner for Trade and Industry Albert Muchanga said that although the notion of protectionism is on the rise across the world, Africa is contributing positively to the global multilateral system.

"The AfCFTA is being formed at a time when protectionism and retaliatory trade measures are on the rise," Muchanga said, stressing that it will also allow African-owned companies to enter new markets, with significant reduction in input cost.

Fair postponed

The impact of the COVID-19 pandemic on the AfCFTA and intra-Africa trade and economic integration ranges from stunting some of the recent success gained in cross-border trading to hampering the progress of some supportive initiatives that envisaged realizing the AfCFTA.

In a recently published report, the UNECA stressed that at least 42 African countries applied partial or full lockdowns in their quest to curb the pandemic, and the lockdowns have helped suppress the virus but "with devastating economic consequences", eventually diminishing recent gains in terms of enhancing intra-Africa trade.

The impact of COVID-19 on the AfCFTA also includes relinquishing some of the flagship initiatives.

In May the AU and its partners announced the postponement of the second Intra-African Trade Fair, or IATF, scheduled for this year due to concerns related to COVID-19.

The IATF, which was formed to serve as a marketplace bringing together continental and global buyers, envisaged providing a continental platform for entry into a single market of more than 1.2 billion people in Africa joined together by the AfCFTA.

As countries across the globe are engaged in careful evaluation of their trading endeavors amid the pandemic, African countries have been urged to exploit the unintended opportunity in terms of filling the gap by strengthening intra-Africa trading engagements.

"The coronavirus pandemic has made it difficult for countries, private businesses to trade like before," Pedro said. "African business people are not traveling to other parts of the globe to facilitate their import and export endeavors like they used to do before.

"This is a remarkable opportunity for us to look into the potential of boosting intra-Africa trade."

He underlined the importance of realizing Africa's trade and economic independence.

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