The third and final webinar in our AfCFTA series in partnership with the UK Department for International Trade, explored the challenges and opportunities presented by the Continental Free Trade Agreement was a resounding success. Our impressive panel, made up of Commissioner for Trade & Industry, African Union Commission, Albert Muchanga; HM Trade Commissioner for Africa, Emma Wade-Smith OBE; Head of Research, Africa & Middle East at Standard Chartered Bank, Razia Khan; Founder of AB & David Law, David Ofosu-Dorte; and Head of Grains & Oil Seed Trade at Export Trading Group, Giles Lewis, brought all their experience and expertise to the table making for a fruitful discussion.
Watch the footage here.
AfCFTA is a $450bn opportunity: The World Bank estimates that the successful implementation of the AfCFTA has the potential to add 450bn USD to Africa’s GDP over the next 10 years. As other nations look increasingly inwards, this is an opportunity for Africa to lead the global trade agenda.
1. Post-crisis recovery: The AfCFTA will play an important role in accelerating economic growth in the longer term and offsetting some of the economic headwinds resulting from the Covid-19 crisis, preventing permanent scarring such as widespread business closures and job losses. Governments and businesses should seize the opportunity to recover in a greener, more sustainable way.
2. Significant progress already made on standardisation and rules of origin: intent to have a ‘Made in Africa’ initiative recognised across the continent in short term future.
3. Infrastructure is key to successful trade: The African infrastructure gap (estimated at between $130 and $170bn per year) is a significant impediment to intra-African trade. Investment in infrastructure and transport linkages is much needed to support the trade framework.
4. Opportunities: Construction (to bridge the infrastructure gap), food / agribusiness, textiles and healthcare opportunities made real by AfCFTA
5. Challenges: SMEs preparedness: More work needs to be done to prepare and encourage SMEs. Surveys show that only 45% of African SMEs are ready to take advantage of the AfCFTA. In order for business of all sizes to reap the benefits of the free trade agreement, clarity, consistency and transparency are essential, as well as collaboration between both public and private sectors. The work of organisations like Invest in Africa will be vital here.
6. AfCFTA creates Economies of Scale that makes Africa a more attractive investment destination: Historically, investor appetite into Africa has been low, due in large part to market size as well as tariff and non-tariff barriers. The free trade area represents an incentive for the private sector to get involved in Africa by creating economies of scale and inspiring private capital flow. AfCFTA can turn the scale ‘on paper’ into a reality and make the opportunity worthwhile for larger investors.
7. Be patient, be persistent, be positive: The last year has shown that when we pull together we can achieve remarkable things (vaccines that used to take 10 years, ready in one year)- AfCFTA won’t be perfect from 2021 but the foundations have already been created, the political will is there, now it is up to the private and public sector to collaborate and support one another to ensure the single greatest global trade opportunity succeeds.