For the African Continental Free Trade Area (AfCFTA) to deliver on its promises, the private and public sectors on the continent must work together, Economic Commission for Africa (ECA) executive secretary Vera Songwe has said.
At the virtual launch of trading under the AfCFTA on January 1, Songwe said, if done properly, AfCFTA “will be the plan that turbo charges investment, innovation and ultimately growth and prosperity for Africa.”
Three heads of State also spoke at the ceremony. South African President and chairperson of the African Union (AU) Cyril Ramaphosa said that, while the start of trading represented a milestone for the people, member States should ensure the creation of a conducive environment for the continent’s young people and women to benefit from the opportunities presented by the agreement.
President Mahamadou Issoufou of Niger congratulated African leaders who helped to shape the agreement, saying the start of trading was “one of the best New Year’s gifts for the whole continent.”
President Nana Akufo-Addo, whose country is hosting the AfCFTA secretariat, described the launch as an important step towards realising the goal of continental integration.
With 54 member States having signed the agreement, it was a strong signal that Africa was ready to start trading on the basis of new rules and preferences that would ensure an integrated African market, commented AfCFTA secretary general Wamkele Mene.
The AfCFTA is the largest trading agreement in the world since the creation of the World Trade Organisation, with the potential to unite more than 1.2-billion people in a $2.5-trillion economic bloc and usher in a new era of development.
It is slated to have the potential to generate a range of benefits through supporting trade creation, structural transformation, productive employment and poverty reduction.
The agreement entered into force on May 30, 2019, after the treaty was ratified by 22 countries − the minimum number required under the treaty.
Trading was initially scheduled to start on July 1, 2020, but the Covid-19 pandemic resulted in a six-month delay.
Eritrea is the only country which has yet to make any commitment to the continental body.
The ECA, through its African Trade Policy Centre, has been working with the AU to deepen Africa’s trade integration through the effective implementation of the agreement by supporting the AfCFTA ratification process through policy advocacy.
The ECA is also assisting member States to develop national strategies for the implementation of the AfCFTA in partnership with the AU Commission, the International Trade Centre, the United Nations Conference on Trade and Development and a selection of independent trade experts with the financial support of the European Union.
SOUTH AFRICAN AGREEMENTS
Meanwhile, January 1 marked the start of preferential trade for South African firms under two new trade agreements.
They are with countries ready to trade under the AfCFTA and with the UK under the Southern African Customs Union.
South Africa has put in place the legal and the administrative processes for preferential trade under the AfCFTA.
A number of the signatory countries for AfCFTA have begun to put the domestic administrative arrangements in place to enable trading under the new terms. These should be progressively expanded within the next few months.
Minister of Trade, Industry and Competition Ebrahim Patel called on South African farmers and manufacturers to gear up for the new opportunities in export markets.
“Trade with the rest of the continent is a critical source of output and jobs growth. African countries recognise that industrialisation is critical to the development of the continent.
"The new agreement that comes into effect today will take some time to be fully operational but has the potential to be transformative for Africa, breaking our dependence on a neo-colonial pattern of trade that characterised trade. Our continent exports raw materials and imports finished goods, with substantial value added in the process.
“Covid-19 simply reminded us of the enormous price we pay for not developing advanced economies. This is Africa’s moment to build resilient, innovative economies on the back of the large markets that the free trade agreement puts in place. It will take dedication and disciplined implementation over the next few years to fully realise the benefits,” he said.
Patel said the summit decision to start trade under the AfCFTA was historic and a milestone in the continent’s longstanding efforts to integrate and industrialise.
“AfCFTA presents South African producers and manufacturers with an opportunity for expansion to new markets in West, Central, East and North Africa, and provides alternative markets for the export of value added goods, as well as services. In addition, exports to the UK can continue seamlessly with the new agreement with the UK in place,” Patel said.
In addition, trade for local firms with the UK started on the same day under the new economic partnership agreement between six Southern African countries and the UK, replacing the European Union partnership terms for the UK market that was in place until December 31, 2020.
The agreement with the UK effectively retains the terms of trade in the existing EU agreement and will govern the bilateral trading relationship between each of the Southern African countries − South Africa, Lesotho, eSwatini, Namibia, Botswana and Mozambique − and the UK.
Both the EU and the UK are significant trading partners for South Africa.