AfCFTA: Bridging gaps critical

SOUTH African President Cyril Ramaphosa (right) with African Union commissioner for trade Albert Muchanga (left) after being handed the 2018 Africa Trade Report during the Afreximbank’s AGM and 25th anniversary celebration in Nigeria recently. Looking on is Nigeria’s Minister of Finance Kemi Adeosun. PICTURE: COURTESY OF AFREXIMBANK

AFRICA is a continent that has the capacity to effectively trade with itself given the population size and the abundant raw materials that can be added value to and supplied locally, yet intra-trade remains below 20 percent.
For a long time, various stakeholders have been quoted in many fora talking about the need to increase intra-Africa trade in order to transform the continent. However, those discussions have ‘stayed in the conferences’ to the frustration of many and this lack of implementation of the ideas has resulted in the region remaining in the doldrums.
Realising that talk without implementation is meaningless and a barrier to the continent’s growth goals, Africa will soon launch the African Continental Free Trade Area (AfCFTA), which will result in the creation of a signal market and ensure free movement of goods and services.
It will also be a catalyst that will transform the continent through intra-Africa industrialisation and it is anticipated that it will boost trade by 50 percent or more, within the first decade of its implementation.
African Union (AU) commissioner of trade Albert Muchanga says the agreement will accelerate the integration of African markets, foster regional value chains, promote dynamic comparative advantage across Africa for certain kinds of goods and boost employment.
Supporting these sentiments is Nigeria’s President Muhammadu Buhari, who believes that no country can survive on its own, and thus, the AfCFTA will be a catalyst that will unify the continent through trade.
“Trading is important and also the terms of trade. Therefore, there is need to ensure that the national, regional and international interests are balanced,” Mr Buhari said.
While the AfCFTA may be a huge milestone in boosting the low level of intra-Africa trade and intra-African investments, its success is undermined by infrastructure and financing gaps.
According to statistics, Africa has an infrastructure funding gap of between US$130 billion and US$170 billion annually.
African Export and Import Bank (Afreximbank) board member Anil Dua believes that for intra-Africa trade to work, efficient road, rail and water transport systems are cardinal as they facilitate the easy movement of goods and services.
“It does not make sense for a manufacturer to produce good products in Zambia for supply on the continent, when they cannot be transported to neighbouring Angola due to lack of transport infrastructure. Africa needs to be linked by roads and rail, if it is to trade with itself,” he said.
But how can Africa close the financing and infrastructure gaps? Does the continent have capacity to finance its infrastructure and investment needs? What strides have been made in accelerating regional integration?
In response, Bank of Zambia Governor Denny Kalyalya says there is relatively sufficient finance on the continent, but that the private sector also needs to come up with bankable projects that will give development institutions such as Afreximbank and African Development Bank, as well as pension funds the impetus to release more funds.
“Finances can be found but the question is, whether we have bankable projects. A number of private sector mobilisation is required because we do not seem to be doing fine in that area – everything keeps falling on the laps of Government, which is already constrained.
“Public-private partnerships are also key in the effective undertaking of the infrastructure projects,” Dr Kalyalya says.
Clearly, regional development institutions have the capacity to collectively finance infrastructure and trade-related projects because Afreximbank, for instance, has provided financing to a tune of US$50 billion and over US$65 billion in syndications and guarantee activities in the last 25 years.
Furthermore, Afreximbank President Benedict Oramah notes that the bank will distribute US$25 billion to support intra-African trade from 2017 to 2025. The disclosure was made at the just-ended annual general meetings held in the Nigerian administrative capital, Abuja.
To date, about US$8 billion of the total commitment has been released to most countries for infrastructure development and trade promotion.
The private sector has also played a pivotal role and is alive to the fact that regional integration can fully be achieved through partnerships and one such partnership is that of Liquid Telecom, a subsidiary of Econet Wireless Global with Telecom Egypt, which will result in the completion of terrestrial fibre network stretching across the continent.
Liquid Telecom, which is owned by Zimbabwean business mogul Strive Masiyiwa, has been building a fibre network across southern Africa covering Botswana, Democratic Republic of Congo, Lesotho, South Africa, Zambia and Zimbabwe. It also has a presence in Rwanda, Kenya and Uganda.
The firm will link its network from Sudan into Telecom Egypt’s network via a new cross-border interconnection – bringing together a 60,000 kilometres network that runs from Cape Town, through all the southern, central and eastern African countries, and has now reached the border between Sudan and Egypt.
“Completing our vision of building a single network running on land, all the way from Cape to Cairo, is a historic moment for the company and for a more connected Africa,” Mr Masiyiwa said during the signing ceremony of the memorandum of understanding between the two companies recently.
The network not only represents a remarkable engineering achievement that has overcome some of the most challenging distances and terrains on the continent, but it supports the rise of Africa’s digital economies and regional trade integration aspirations.
With such initiatives, it is envisioned that Africa can achieve more than late British mining magnate and politician of the 19th century, Cecil John Rhodes’s dream of integrating the continent through a railway line stretching from Cape Town to Cairo.

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