Business leaders: COVID-19 shouldn't derail AfCFTA

The COVID-19 pandemic is not a reason to delay the start of trade under the African Continental Free Trade Area (AfCFTA), on July 1, 2020 as earlier envisaged, according to African trade experts and business leaders.

Business leaders on the continent have signed an Open Letter stressing that the AfCTFA can and must remain on course.

 

There are innovative ways to keep AfCFTA on track, they stressed, "and we should be willing to explore them."

 

Their view is emphasised in a new report, the AfCFTA Year Zero Report, published by The AfroChampions Initiative.

 

Speaking from Accra, Ghana, Edem Adzogenu, Co-Chair of the AfroChampions Initiative Executive Committee, on Wednesday, May 6, told The New Times that postponing the start of trading would be a mistake.

Launched in January, 2017, the Afrochampions is a special implementation vehicle for major, innovative, public-private partnerships to harness big opportunities in Africa for transforming the continent’s best companies and institutions into globally significant players.

Adzogenu said: "It certainly will be a mistake to postpone because this may well be our new reality. My view is that the political decision has already been made for Start of Trade to commence on July 1. If COVID-19 hadn’t struck , we would be on course. So, COVID-19 reality needs to be evaluated within the context of the technical, health and economic realities that the pandemic presents.

"The reality is that we need essential products to be produced and health personnel moving across borders. It will be a mistake for African countries to keep treating each other as foreign markets in times like this."

Before the African business community made its position known, last month, President Cyril Ramaphosa of South Africa, who is AU Chairperson, recommended that the date - July 1, 2020 - originally chosen for starting trading under the Agreement be postponed to January 1, 2021.

Ramaphosa indicated that this was due to the impact of the pandemic on the work and operations of the Union.

According to sources, AU Chairperson is now consulting member states to make a final decision, either on postponement or starting trading on July 1.

Adzogenu noted that modes of communication have evolved over the past century and, to assume that 2021 will be any different won’t be prudent.

He stressed: "We can’t anticipate 2021 just as we didn’t anticipate the COVID-19 pandemic. So we must approach this situation as if this is the new normal and find the measures, available technology and resources to proceed with the negotiations."

In their report, they emphasised that instead of delays, COVID-19 is a reason why the start of trade under the Agreement should be accelerated.

Indeed, it is noted, they expect the level of readiness and commitment to be impacted by the COVID-19 crisis. Nevertheless, AfroChampions strongly advocates that in the face of COVID-19, Africa should use the AfCFTA to simultaneously play offensive and defensive by adjusting to current and critical issues needed to fight the pandemic.

On the offensive, they note, the July Start of Trade can focus on restricted trade in essential goods such as pharmaceuticals and food products to the fight against COVID-19.

On the defensive, current border closure will continue as part of anti-COVID measures while at the same time permitting the entry of critical and life-saving goods.

They noted that the temptation to postpone is natural, given the health emergency and how it has disrupted preparedness and finalization of negotiations and operationalization.

However, they stress, it is quite easy to use videoconferencing and online work platforms to keep AfCFTA negotiations and operationalization on track.

According to the Afrochampions, negotiators must adapt to the changing times.

"The new AfCFTA Secretariat must fully embrace and innovate for the crisis period into which it has been birthed. We urge African trade ministers and governments to make the tough, creative, bold choice to march on – despite COVID-19," reads part of their 33-page report.

Consensus

But Dr Mama Keita, Director of the UN Economic Commission for Africa in Eastern Africa, warned that consensus is important.

She noted that "by general consensus," the pre-requisite conditions for the implementation of the agreement were not met before the global outbreak of COVID-19 crisis.

"It was hoped that the pending issues would have been fixed between March and July 2020 but most of the related activities have become impossible with the pandemic.

The AfCFTA has protocols on trade in goods and trade in services. And the negotiation process was organized in phases, starting with issues related to trade in goods.

Concerning trade in goods, Keita said, two outstanding issues - reaching consensus on the protocol on rules of origin and every country submitting its tariff reduction schedules - existed before the COVID-19 crisis.

Resolving the two issues, she added, constitutes a precondition for the operationalization of the AfCFTA.

She added: "They were not met before the spread of COVID-19 and they cannot be met during this crisis, because they require several stakeholders to meet, both within countries, and also Africa-wide.

"This is not possible with the restrictions in movements and physical gathering imposed by COVID. Given this backdrop, we think that starting off on a consensual basis is important."

Nonetheless, she reiterated her office's view that the AfCFTA is a tremendous opportunity for businesses in Africa.

"We, as the UN Economic Commission for Africa, argue that the AfCFTA will be an engine that will boost the industrialization process in Africa."

Private sector waiting impatiently

But members of the private sector are holding their fingers crossed, hoping the AU decision is changed.

Robert Bafakulera, chairperson of the Rwanda Private Sector Federation (PSF), said: "Postponing will not help us, but it will take us back a lot. Trade, just like life, should not stop or be postponed. Business can't stop. And, starting trading (under the AfCFTA) on July 1 will enhance trade on the continent."

Bafakulera also noted that it is important to note that the continent has not been affected as other continents and there is hope that once African countries coordinate better and work harder, jointly, the pandemic will end faster.

Prudence Sebahizi, Chief Technical Advisor on AfCFTA at the AU Commission, said: "I don’t want to preempt the ongoing consultations with Member States. Implementation of AfCFTA depends on Member States readiness. We at the AUC can only facilitate the process where possible."

"If Member States commit to start opening their borders on July 1, 2020, well and good. The private sector is waiting impatiently. The AfCFTA implementation can address challenges that are already caused by Covid-19 especially movement of essential products."

Rwandan economist Teddy Kaberuka also stressed that there could be no better time to start trading under the Agreement than now.

Kaberuka said: "It is very wrong to postpone. This, actually, is the time for Africa to initiate its common market, following the shutdowns, globally, due to the pandemic. The AfCFTA would be a good opportunity for our businesses."

"Another thing is, since our countries are no longer importing huge quantities as before the pandemic, import duties are low. Thus, continuing with the AfCFTA will enable a good repositioning of the continental economy to cope up. There can't be a better time to start trading under the Agreement."

Besides, Sebahizi's recommendation is that in order to initiate the processes towards minimizing damage to trade and industry in Africa, the start of trading under the AfCFTA regime should be maintained.

This, he explained, is in order to cushion the fragility of some member states against the pandemic, especially for commodity-dependent countries, LDCs, and small island states.

"Africa should not give up on the AfCFTA in the face of economic and public health pressures caused by COVID-19. Commodity price volatility will be with us for a long time to come," Sebahizi said.

"Given this reality and the need to continue earning foreign exchange to service debts, meet import needs and maintain stable currencies, African countries have to rely on the AfCFTA as their next export and import frontier."

jkaruhanga@newtimesrwanda.com

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