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Africa Continental Free Trade Area will emerge world’s largest free trade area soon — AfDB President, Adesina

The size of consumer and business expenditures in Africa will rise to $6.7 trillion by 2030

Dr. Akinwunmi Adesina

With over 50 countries harmonizing tariffs, rules and standards, the Africa Continental Free Trade Area will soon become the largest free trade area in the world, so declared the President, African Development Bank Group, Dr Akinwumi Adesina.

According to him, investors globally now realize that Africa is the place to be.

Adesina spoke in Durban, South Africa on Monday at the opening of the 2nd Intra African Trade Fair (IATF) at the Inkosi Albert Luthuli International Convention Centre.

Describing the fair as the right event at the right time, he said:”Investors now know that if you are not in Africa, you are not in business.

“The Africa Continental Free Trade Area will create a market of 1.3 billion people and drive a combined gross domestic product of $3.3 billion. The size of consumer and business expenditures in Africa will rise to $6.7 trillion by 2030.

“The African Development Bank Group is a strong supporter of the Africa Continental Free Trade Area. Especially now, as we build back better from the COVID-19 pandemic, the need to boost intra-regional trade has never been greater.”

 “Africa’s gross domestic product contracted by 2.1% last year. Trade volumes were down by 8% for exports and about 16% for imports. The pandemic pushed some 30 million people into extreme poverty. Another 39 million remain at risk.

 “Business as usual is a luxury we cannot afford. Africa’s recovery must be a green and resilient recovery. A recovery that leads to quality health infrastructure and a strong indigenous pharmaceutical sector,” Adesina, a former Nigeria’s Minister of Agriculture in the Goodluck Jonathan administration.

The AfDB President also said:”A recovery that speeds up Africa’s industrialization, reduces our exposure to the vagaries of global commodity markets, and takes full advantage of the Africa Continental Free Trade Area.

 “The Africa I envisage is a healthy continent that looks well after itself. A continent also that has seized upon industrialization to fully unleash the 4th industrial revolution.

“Technological advances offered by the 4th industrial revolution could be Africa’s revolution and pave the way to an era of unprecedented prosperity.

 “A strong and diverse manufacturing sector will enable Africa to mitigate the risks commonly associated with commodity exports.

“It will help us withstand exogenous shocks of the kind we are currently experiencing as a consequence of the pandemic. Moreover, it will offer stable employment for our burgeoning youth.”

Also speaking, the President and Chairman of the Board of Directors of the African Export-Import Bank (Afreximbank), Mr Benedict Oramah, disclosed that the bank was set to disburse $40 billion to support intra-African trade in the next five years.

 

He said the fresh fund would enable the bank to build on the $20 billion dollars it  disbursed in the last five years.

“The trade fair is in demonstration of our will as a people to defy the dark clouds cast by the COVID-19 pandemic and continue our journey towards collective self-reliance as Africans. We hinge our fate on TRADE, that powerful tool that can be a source for good and bad. 

“It was trade that led to the fragmentation of Africa; it was trade that took millions of Africans against their will to far-away lands.

 

“Today, we embrace the same trade as an instrument for progress as a tool for reversing the damage it inflicted on Africa over many decades,” Oramah said.

 

Listing the initiatives the bank was implementing to guarantee the success of the AfCFT, he disclosed that the bank was also providing Letters of Credit Confirmation lines to African commercial banks to support cross-border trade.

 

“It is our aim to onboard 500 banks with aggregate lines of over 8 billion US Dollars. The Bank has so far onboarded nearly 480 and is today the bank with the widest messaging links with African banks.

 

“Working with the AU and the AfCFTA Secretariat, we have created a Pan-African Payment and Settlement System (PAPSS) to facilitate cross-border payments in national currencies.

 

The system which is currently piloting in the West African Monetary Zone (WAMZ), will strengthen national currencies, integrate Africa’s payment infrastructure, and save the continent about 5 billion US dollars in transfer charges.

 

“Above all, it will return to Africa, large volumes of trade diverted away from the continent due to currency issues. Afreximbank is supporting the pilot in an amount of 500 million US dollars and expects to expand this to 3 billion US dollars when fully adopted across Africa.

 

“We are piloting an African Collaborative Transit Guarantee Scheme that will facilitate an uninterrupted flow of goods across multiple borders with a single transit bond, operating on a risk-sharing platform with country-specific issuers.

 

“Afreximbank is committing $1 billion to the Scheme. We envisage that this Scheme will save the continent over $300 million in transit cost annually. And with it, goods can move from Cape to Cairo seamlessly, saving time and costs,”  he said.

 

Oramah added: “We have created a Trade Information Portal that will complement the Trade Fair in availing information about market and investment opportunities across Africa.

 

“This Artificial Intelligence-enabled System will help develop predictable supply chains and enhance connectivity among African businesses. A Customer Due Diligence Repository Platform (also called the MANSA Platform) has been created to ease the cost of compliance and to restore investor confidence in, and attract investments into, Africa.

 

The MANSA Platform issues African Entity Identifier (AEI) numbers that act as a passport for accessing certain services. About 1,500 entities from all across Africa have already been onboarded on the platform.

 

“We are working with the AfCFTA Secretariat to create an $8 billion AfCFTA Adjustment Facility that will cushion African countries from fiscal revenue losses from the tariff removals associated with the AfCFTA and to help the private sector to retool their operations as they reorient their operations towards the continental market.

 

“We have created the Fund for Export Development in Africa to support manufacturing, particularly light manufacturing, and agro- processing, by facilitating access to equity finance.

 

In partnership with the AU, the AfCFTA Secretariat, and other partners, we have created this $20 million  biennial Intra- African Trade Fair that will help improve business to business connectivity in Africa.”

 

The bank is also working with several African Governments to create and or expand Industrial Parks (IPs) and Special Economic Zones (SEZs) to address the infrastructure bottlenecks to industrialisation. Projects in the aggregate amount of about $1.2 billion US dollars have been implemented or underway across ten countries.

 

“Also, the bank has launched the African Quality Assurance Centre (AQAC) initiative through which it is developing infrastructure with up-to-date technology for the testing and certification of agro- processed and manufactured goods for intra-African trade and trade with the world.

 

“In addition to the automotive standards, we have so far supported the harmonisation of 121 standards for healthcare and medical equipment,” he stressed.

 

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Written by Per Second News

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