Push for more countries to ratify Africa free trade pact ahead of AU summit
Some African nations are pushing for more states to ratify the African Continental Free Trade Area, or AfCFTA, with only 18 having done so out of the 22 needed for the agreement to come into force.
The clock is ticking to the AU’s 32nd Ordinary Session to be held February 10 and 11 in Addis Ababa, Ethiopia, where some AU members had hoped to announce the agreement was in place, according to Standard Bank’s head of corporate and investment banking in Africa, Victor Williams.
South Africa’s Parliament ratified the agreement in December, following consultations with trade unions, concerned the country could be flooded by cheap imports leading to job losses.
Kenya, Ghana, Rwanda, eSwatini (formerly Swaziland), Chad, Niger, Sierra Leone and Uganda are among the other countries who have deposited their instruments of ratification.
A panel discussion on free trade at Deloitte’s Africa outlook conference on Thursday heard that intra-Africa trade accounts for just 15% of all trade on the continent, and the AfCFTA has ambitious plans to double this by 2022.
Williams said it was critical for Nigeria and Egypt to sign on to the agreement, as the success of the free trade area would be determined by the continent’s largest economies participating. This would require them “to look beyond their self-interest”.
No North African countries have signed the free trade pact yet. Nigeria’s President Muhammadu Buhari will decide by the end of the month, according to Williams.
The AfCFTA aims to connect all 55 African states into the world’s largest free trade area. The principle was adopted in March 2018 in Kigali, Rwanda.
Political will paramount
Business leaders at the Deloitte panel discussion on Thursday shared their experiences of operating on the continent.
Hennie Heymans, managing director DHL Express in sub-Saharan Africa, said while a common currency was a “very very long way away”, improving infrastructure was critical to increasing ease of trade.
“Political will is paramount…it’s really time to stop talking about ‘it’s time for Africa’, it’s time to do something,” Heymans said about his experiences of operating in 40 sub-Saharan African countries.
The AfCFTA “would make our lives easier” as there is an immense amount of wastage, including the cost of logistics and time, said former CEO and executive director of the Mr Price Group, Stuart Bird.
The Mr Price Group has operations in 14 countries, mainly in Africa, and Bird said time was very important for the retailer, as “fashion is perishable” and time disruptions in transporting stock on the continent had become their “biggest headache”.
“The ability to have flow of product is very important to execute and will also determine the success of a range,” Bird commented.