Africa Prosperity Dialogues day one: role of public and private sectors in AfCFTA operationalization

In concomitance with the celebration of the International Customs Day by the World Customs Organisation, the Africa Prosperity Dialogues, aka "Kwahu Summit" also started in Ghana. The event has been dedicated to the African Continental Free Trade Area, and it opened today under the slogan “AfCFTA: from ambition to action”. The Africa Prosperity Dialogues is a summit launched by the Africa Prosperity Network (a Ghanaian private not-for-profit organization), to give the opportunity to policymakers, captains of industries and representatives of International Organizations active in Africa to meet physically and discuss how to accelerate the implementation of the Agreement. Objective: to share thoughts and experiences on issues and initiatives required for Africa to achieve the goal of a more economically integrated continent. The day 1 of the Dialogues mainly focused on challenges that constrain African trade and their possible solutions. It was also an occasion to take stock of the achievements and lessons learned so far since the launch of the AfCFTA.

Large consensus was reached between participants that the AfCFTA will spur the economic growth and development of Africa by consolidating its economies into a single market where barriers that currently constrain trade (both at tariff and non-tariff level) will be progressively eliminated. The AfCFTA lays the foundations for the establishment of a future Customs Union and of a Single Market as envisaged by the Abuja Treaty of 1991.

But in order to increase inter-African trade, it is essential that both governments and the private sector play their role. The first ones, by completing the ratification processes of the Agreement, its Protocols and other outstanding issues that are necessary to complete the full AfCFTA regulatory framework (ex. rules of origin). So far, 45 States have ratified the Agreement, with Mozambique currently in the process of depositing its instrument of ratification to the AU Commission. Phase 2 negotiations have also been finalized, with the texts of Protocols on Investments (which aims at setting out a continentally-harmonized regime for investments in Africa) on competition policy and Intellectual Property Rights that have been agreed and are now ready to be adopted and ratified. In fact, it must be remembered that according to Art. 24 of the Continental Free Trade Agreement, the various AfCFTA Protocols do not enter into force automatically, but 30 days after the deposit of the 22nd instrument of their ratification. In addition, African governments need to actively work on elimination of barriers to trade (especially non-tariff barriers), renouncing to the temptation to prioritize national interests over regional and continental ones.

The role of the private sector, on the other hand, is to start mastering the technicalities of the Agreement, gaining awareness on the fact that the AfCFTA will make more convenient to establish trade transactions with other AfCFTA State Parties, rather than with third countries. The underlying objective is to transform Africa in a continent less dependent from foreign imports, especially of manufacturing goods.

The main conclusion is that despite its base of 450 millions of formal enterprises, Africa suffers from insufficient productive capacities of its economies, which prevent them from increasing exports both inside and outside the continent. To reverse this trend, different solutions have emerged during discussions. Among them, facilitating the establishment of “AfCFTA trading companies” (companies purchasing products from different suppliers and selling them to other African countries) and identification of companies who have the potential to export around which to develop specific “tutorage” programs to help them to expand to other markets in the continent. Another proposal was the development of tailored diaspora engagement policies by African States to attract investments from the communities living out of Africa, linking them to local investors. In this regard, it was also proposed to identify success stories of individual experiences of African people that after having relocated to other countries abroad, have returned to Africa and invested in successful businesses. Such experiences, it was observed, should be collected in a case book for inspiring others to engage in similar ventures.

On the other hand, a lesson learned which was revealed by the AfCFTA Secretariat during the piloting of the AfCFTA Guided Initiative is that information for accessing to other markets in Africa still represents one of the main barriers to intercontinental trade, together with the logistics barriers and transport costs, which are so high that they disincentive African traders from trading between themselves. Main culprits are the infrastructure deficit and non-tariff barriers. In this regard, it has been noted that Africa has a huge infrastructure gap that impedes intra-continental trade to take off. This gap, estimated between 130 and 170 million USD per year, not only concerns roads, railways and energy, but also digital infrastructure. Data centres, for instance (which provide the foundations required to drive the delivery of data services on the continent) are still insufficient. But as any challenge - participants to the meeting noted - this is also an opportunity for the private sector to come in, working closely with governments in order to drive the development of infrastructure in Africa through their investments, as it happened in the telecommunication sector.