Cape Town – The Africa Continental Free Trade Agreement (AfCFTA) has the potential to break the historical pattern of Africa not producing what it consumes and not consuming what it produces, according to Trade, Industry, and Competition Minister Ebrahim Patel. Speaking at the opening of the first live AfCFTA Business Forum in Cape Town on Sunday, Patel highlighted how the AfCFTA could address the legacy of colonialism that left Africa with small, divided nation-states and fragmented markets, which have contributed to weak economic performance.
The AfCFTA, launched in July 2019, aims to increase trade between African countries with goods genuinely made on the African continent, and avoid the neo-colonial history of Africans selling goods largely made elsewhere in the world. The agreement includes measures such as progressive elimination of tariffs and liberalization of intra-Africa trade to stimulate economic growth and make it easier for African businesses to benefit from the growing African market, which consists of around 1.3 billion consumers. The ongoing conference is being attended by over 1,200 private and public sector delegates to raise awareness about the opportunities presented by the AfCFTA.
Dr. Monique Nsanzabaganwa, Deputy Chairperson of the African Union Commission, emphasized that it is now up to the private sector to take advantage of the instruments and tools provided by the AfCFTA to start trading. These instruments include the AfCFTA e-Tariff Book, Rules of Origin Manual, African Trade Observatory, the Intra-African Trade Fair, the AfCFTA Adjustment Fund, the AfCFTA Automotive Fund, the Pan-African Payments and Settlement System (PAPSS), the AfCFTA Guided Trade Initiative (MANSA), the African Business Council, and the AfCFTA Dispute Settlement Mechanism, among others. Nsanzabaganwa stated that these instruments are designed to ensure legitimate transactions thrive under the AfCFTA.
She further mentioned that the African Union Commission is working with member states to ensure there is sufficient evidence-based information on regional value chains, market intelligence, resilient health infrastructure, food security, and peace. She emphasized the need for strong collaboration on green industrialization, as Africa contributes less than 2% to carbon emissions but should strive to maintain this best practice as it industrializes.
Minister Patel highlighted that despite Africa having 17% of the world’s population, it only captures 3% of world trade and generates less than 3% of the world’s gross domestic product. Furthermore, Africa produces less than 2% of the world’s manufacturing output and less than 1% of the world’s steel and car production. Patel emphasized the role of trade in changing this situation, stating that throughout history, trade has been the engine that connected humanity and linked communities, exposing them to new ideas, new ways of doing things, and new products.
Patel also mentioned that South Africa recently hosted its 5th annual Investment Conference, where President Cyril Ramaphosa announced that R1.5 trillion in new investment has been mobilized into the South African economy over the past five years. This includes investment in building Africa’s first anesthetic plant and a facility for producing Covid-19 vaccines, as well as investment in new solar-powered energy units and mines in the Northern Cape.
The AfCFTA holds significant potential for Africa to transform its trade landscape and overcome historical trade imbalances. With concerted efforts from the private sector and collaboration among African countries, the AfCFTA can pave the way for increased intra-Africa trade, economic growth, and prosperity for the continent.
