Dakar, 15 May 2022 (ECA) - The private sector is the major engine for the successful implementation of the African Continental Free Trade Area (AfCFTA), according to panellists at a side event at the 54th session of the Conference of Ministers of Finance, Planning and Economic Development in Dakar, Senegal. It has the potential to transform African economies and position the continent as an increasingly dynamic force in the international arena.
That was the overarching message at the launch of two complementary reports by the Economic Commission for Africa (ECA). One emerged from a study on the impact of the African free trade area, AfCFTA, on demand for transport infrastructure and services and the second unveiled key findings from the AfCFTA Country Business Index (ACBI) Report 2022. The latter is the first report in a series of publications which aim to measure the ease of doing business within Africa, organized by ECA and the UN Global Compact, with the support of the European Union.
In her opening remarks, Ms. Vera Songwe, UN Under-Secretary-General and Executive Secretary of the ECA said the AfCFTA Country Business Index (ACBI) report sheds light on what works and what does not work in AfCFTA and provides useful information on trade challenges faced by women traders and small businesses.
“Considering that women make up 60-70% of small-scale cross-border trading, accounting for much of the income of small communities along trading routes, the ACBI evaluates how well the system is working for women and SMEs,” the Executive Secretary said.
That will in turn “ensure that countries in Africa can seamlessly trade with each other without the constraint of complex and often expensive customs procedures and tariffs,” she noted.
Ms. Songwe also spoke about the establishment of essential infrastructure facilitated by Afreximbank and emphasized that all African countries should strengthen their trade cooperation and the harmonization of African financial systems.
Ms. Songwe added that eventually, when the ACBI is conducted across the whole continent, it would enable policy makers to have a more comprehensive view of the bottlenecks in African trade regimes. “It is important to assess, understand and monitor the private sector’s perception of the AfCFTA in order to ensure a sustainable and inclusive implementation of the AfCFTA.”
Ms. Songwe said that the ECA was grateful for the European Union’s continuing support to the ECA, particularly its work in the implementation of the AfCFTA agenda.
For her part, Ms. Birgitte Markussen, EU’s ambassador to the African Union (AU) described AfCFTA as a “game-changer” leading to Africa’s transformation and said the EU was delighted about the “continuous momentum” in getting it off the ground.
“Trade and regional integration are strategic and traditional areas of mutual interest for EU-AU cooperation and key priorities of the new EU-AU Partnership. It is obvious that the benefits of AfCFTA will only be realized with the active participation of the private sector,” the ambassador said.
Ms Markussen added that the Global Gateway Africa-Europe initiative had been created to increase regional integration, building on AfCFTA, RECs and regional value chains; to establish trade corridors; to support women and youth-led businesses; and support a green transition with raw materials.
Ms. Sanda Ojiambo, Assistant Secretary-General, and CEO of the UN Global Compact (UNGC), said UNGC aimed to help African businesses grow sustainably and the partnership with ECA on the AfCFTA Country Business Index was important to this endeavour.
UNGC has developed a new Africa Strategy, she said, to drive impact on the continent by placing greater emphasis on African priorities and people.
“The private sector plays a critical role in the development of Africa, and hence our new strategy for Africa will ensure businesses across the continent have access to the tools and partnerships they need to play their part in creating a resilient future while adhering to responsible and sustainable business practices,” Ms Ojiambo added.
With reference to the research findings of the AfCFTA Country Business Index (ACBI) from seven countries, namely Angola, Côte d’Ivoire, Gabon, Kenya, Namibia, Nigeria, and South Africa, the Director of the Regional Integration and Trade Division of the ECA, Mr. Stephen Karingi stated that that small firms found custom duties the biggest barrier to trading goods across borders.
He said UN development agencies, African governments, business associations and key partners should reinforce their collaboration to address the challenges faced by women-owned and small and medium sized businesses in trading across borders.
Presenting the findings of the report on the demand for transport as a result of AfCFTA, Mr. Robert Lisinge, Chief of the Energy, Infrastructure and Services Section of the Private Sector Development Division of ECA, said that with AfCFTA, over 25 per cent of intra-African trade gains in services would go to transport alone. Nearly 40 per cent of the increase in Africa’s services would be related to transport.
“According to the research findings, AfCFTA requires 1,844,000 trucks for bulk cargo and 248,000 trucks for container cargo by 2030. This increases to 1,945,000 and 268,000 trucks respectively if planned infrastructure projects are also implemented,” he noted.
Mr. Lisinge called on the private sector to look for huge investment opportunities in transport infrastructure and services because of AfCFTA.
The speakers were joined on the panel by Mr. Prudence Sebahizi, Chief Technical Advisor at the AfCFTA Secretariat, Dr. Amany Asfour, President of the Africa Business Council, Dr. Emmanuel Onwodi, Director of the Transport Infrastructure Department of the Infrastructure Concession Regulatory Commission of Nigeria and Professor Adji Bousso Dieng, from Princeton University who all spoke of the developmental potential of the free trade area and the critical leadership of the African private sector in ensuring that AfCFTA could deliver on its economic and social development gains.
The annual Conference of African Ministers of Finance, Planning and Economic Development, which is being held in Dakar, Senegal from 11 to 17 May 2022, is on the theme of "Financing Africa's Recovery: Breaking New Ground."
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