An examination of the effects of the coronavirus outbreak on implementation of the agreement.
As of March 2020, 54 African countries have signed an agreement establishing the African Continental Free Trade Area (AfCFTA), of which 29 have deposited their instruments of ratification. The AfCFTA presents unique opportunities for positive economic development, but only if implemented with coordinated regional cooperation. There is a window of opportunity to actualize the agreement’s July 2020 operationalization date despite the emergence of the COVID-19 pandemic and the attendant challenge to policymakers and actors on the continent.
The pandemic provides an opportunity for the AfCFTA to become operational, supporting medical and pharmaceutical trade despite the negative effect of the health crisis on logistics, supply chain, and economic productivity. Globally, key suppliers of health products have imposed more stringent quality checks or export restrictions which affect the free flow of much needed personal protective equipment for essential workers and of testing supplies. As a response to these shortages, African countries must resist the pressure of going alone and instead act collectively to defeat this unprecedented public health challenge by ramping up regional production. Ghana has shown to be a promising example, having tested 68,000 persons as of April 20, 2020, exactly five weeks and four days since its first case on March 12, 2020. In contrast, the United Kingdom had performed 26,261 tests in an equivalent amount of time since its first case on January 29, 2020. South Africa has also shown great capacity in ramping up testing with over 126,937 tests as of April 21, 2020. Putting these capabilities together, accessing raw materials from regional and multilateral partners and developing homegrown solutions shared across the continent will create the intended synergies and build a sustainable value chain that can be scaled up after the crisis.
According to the International Trade Center, “While surgical grade gloves can be produced using different types of materials, the most common one is latex. Some African countries have abundant rubber resources and could envisage dedicating some to the production of gloves. By using less than one percent of its monthly exports of latex, Côte d’Ivoire could produce the 13 million gloves that African health responders require each month to face COVID-19. Ghana and Cameroon also have relevant exports of latex but currently do not export any surgical gloves.”
Vaccine research is ongoing in various advanced economies including the United States, Australia, Europe, and China. No country will feel safe and secure until a vaccine is widely distributed and effectively administered around the world. The patents for the vaccine, once developed, may not allow manufacturing on the continent, however, the logistics and distribution will present profound opportunities for African businesses.
A new Secretary-General of the AfCFTA, Mene Wamkele, was elected in February 2020, and his prime responsibility will be to implement the Agreement amidst closed ports, capital outflows, and macroeconomic instability resulting from the pandemic. An uphill task but not insurmountable, his team should leverage technology and existing distribution lines of the World Health Organization, World Food Program, and other United Nations agencies to ensure that commercial trade facilitation of medical products between member states is achieved amidst the health challenges and in spite of the challenges of logistics (soft infrastructure) and regional dynamics. The Secretariat of the AfCFTA has to work with other multilateral bodies especially the African Union, the African Development Bank, and the African Export Import Bank who have floated social impact bonds on the capital markets to address the health crisis and bring succor to a vast population who are vulnerable. Legislators in member states yet to ratify the AfCFTA should be encouraged to ratify the Agreement. The rules of origin on medical products should be resolved immediately between signatories, which can subsequently serve as a basis to establish rules for more engaging sectors, such as automobiles. Intra-African trade currently accounts for between 16 to 18 percent of the continent’s trade, and the success of the AfCFTA will be dependent on the ability of the Secretariat to increase this share.
Regional agreements show that intra-continental trade and tariff liberalization alone will not be sufficient in providing genuine market access. Non-tariff measures impeding market access and competition, such as quotas, subsidies, and export restrictions, may become even more pronounced in the following months with the objective of protecting health, safety, and the environment, but the continent’s leaders must ensure that this does not impede intra-continental trade.
For the AfCFTA to achieve its intended impact, the mechanisms and operational tools to support the implementation of the AfCFTA including the African Trade Observatory; the Pan-African Digital Payments and Settlement Platform; and the Continental Mechanism for Reporting, Monitoring and Elimination of Non-Tariff Barriers within the AfCFTA will have to be fast tracked. Issues around regulatory arbitrage, intellectual property rights, and the role of Regional Economic Communities must all be carefully considered and integrated during the implementation process. Labor mobility and the impact of tariff liberalization measures on individual country tariffs and revenues will also need to be considered.
The AfCFTA provides significant benefits to the continent, but individual countries will have to surrender their self-interests and make significant sacrifices for the collective benefit. The current coronavirus pandemic presents a unique opportunity to test this model.