Nairobi, Kenya, March 16, 2019 //- When the Africa Continental Free Trade Area is implemented this year, it will create a single market for goods and services for the first time in the continent’s history.
The agreement will cover a geographic area with a combined GDP of $3.2-trillion and a population of 1.2 billion people. It has the potential to drastically accelerate economic growth and exceed the African Development Bank’s current estimates for GDP growth from $1.7-trillion in 2010 to more than $15-trillion by 2060.
For African governments, businesses and citizens, the prospect of the Africa Continental Free Trade Area (AfCFTA) has prompted widespread excitement and optimism, especially among some of Africa’s leading business and political figures.
South Africa’s President Cyril Ramaphosa publicly stated that “this is a free trade area that has never been seen in the world. It’s going to be the largest integrated market on the African continent, which is a clear demonstration that indeed Africa is not only on the rise, but Africa is on the move.”
With 30% of the world’s remaining mineral resources, and 60% of the world’s uncultivated arable land, Africa’s riches are significant to the future global economy and food security.
Easing investment and industrial output
The World Economic Forum notes that manufacturing only accounts for 10% of total GDP in Africa, well below the figure in other developing regions. A continental free trade area has the potential to reduce this gap and accelerate job creation, especially among young people.
The continent’s reliance on agriculture – which according to some estimates accounts for 60% of all jobs – could also lead to greater regional coordination to ensure produce matches market demands. There is also the promise of greater efficiency brought by technology.
In Nigeria, a public-private partnership between CBI Nigeria and SAP integrated 850 000 small maize producers into the agricultural value chain and equipped unemployed graduates with a technology platform that gives farmers access to farming inputs, telephone credit, banking services and more. Efforts are underway to expand the programme to other regions and elevate the continent’s 250 million smallholder farmers.
Integrating the existing regional economic communities (RECs) into the AfCFTA is no small task. The African Union currently plays host to no less than eight recognised RECs (some of which have overlapping memberships) including the Arab Maghreb Union, the Common Market for Eastern and Southern Africa, the Community of Sahel-Saharan States, the East African Community, the Economic Community of Central African States, the Economic Community of West African States, the Intergovernmental Authority on Development, and the Southern African Development Community. Securing appropriate buy-in and commitment from each of these regional blocs will be vital in AfCFTA’s success.
Legacy infrastructure also poses a challenge, especially in terms of the effective movement of goods between countries that will form part of AfCFTA. Supply chains are the circulatory system of the global economy, but Africa’s legacy of underdevelopment has left its road, rail and ports infrastructure lacking.
Ports infrastructure struggle to keep pace with global standards. While 90% of African imports and exports are driven by sea, PwC estimates that, of the 72% of global container throughput in developing nations, only 1% travels via African ports.
Warehouse Workers Inspecting Products Image by, Sean Justice Corbis
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Integrating talent and trade
It is of course not only Africa’s manufactured goods and agricultural output that should more easily flow across the continent when the AfCFTA is implemented. It is critical that its talent – a youthful population that is expected to more than double by 2055 according to UN estimates – can move freely to access work and apply their skills to solving the continent’s most pressing challenges.
However, many countries still hinder free movement through cumbersome visa requirements. The Africa Visa Openness Report 2017, published by the African Development Bank, McKinsey & Company, and the World Economic Forum Global Agenda Council on Africa, found that Africans need visas to travel to more than half of the other countries on the continent, with only 22% requiring no visa.
Equipping the continent’s talent with the correct skills for the digital age is no mean feat. Africa’s education system has not kept pace with the demands of the global digital economy. Skills shortages have the potential to derail efforts to build a globally competitive digital workforce. Africa’s economic growth cannot be sustained without access to the correct 21st century skills.
The past few years have seen an acceleration in public-private partnerships driving youth skills development initiatives, with millions of youth trained in basic coding skills. By fostering greater regional and continental integration, efforts to equip Africa’s youthful population with appropriate and future-fit skills could be expanded.
Ramaphosa is right: Africa is on the rise and on the move. We are entering a new era of free movement, collaboration, and mutual success among all 50 African countries that will form part of AfCFTA. The question is: how do we, as technology providers, businesspeople, citizens, and policy makers, contribute to its success and build a bright future for all who call Africa home?