AFCFTA
Speakers at the PBA Webinar: Co-founder Lekki Peninsula College, Dr Bunmi Oyinsan, Ambassador Eloho Ejevieome Otobo, Chairman Grand Towers Ltd, Nze Chidi Duru, Ford Foundation West Africa Region director, Dr Chichi Aniagolu-Okoye

Africa’s GDP To Grow By $420bn In 2025 Through AfCFTA Implementation – Experts

2 years ago
6 mins read

African economic integration agenda as enshrined in the African Continental Free Trade Agreement (AfCFTA) has the potential to engender robust industrial development and encourage free trade and enterprise cooperation across sectors on the continent.

This was the summation of experts who gathered during the 5th edition of Prime Business Africa’s Socio-Economic and Entrepreneurship Development Series (SEEDS) which was held virtually on Tuesday, November 30, 2021.

In his opening remark at the webinar on the theme ‘AfCFTA and Business Startups in Africa: The Risks, Opportunities,’ Publisher and Editor-in-chief of Prime Business Africa, Dr Marcel Mbamalu, stated that the AfCFTA was designed to favour Small and Medium Scale Enterprises (SMEs) in Africa, which he said were providing more than 80 per cent of employment and 50 per cent of the continent’s GDP.

Mbamalu stated that the signing of the treaty has many potential benefits with the continent having “a market size in the region of $3 trillion, the AfCFTA will cover GDP of $2.5 trillion of the market.”

With this, he said, “there are bound to be impending challenges especially those which affect SMEs,” hence, the trust of the discourse which was how the start-ups could take the benefits of AfCFTA and mitigate the challenges.

Ambassador Eloho Ejeviome Otobo who moderated the discourse noted that AfCFTA would dramatically improve intra and inter-African trade and grow the continent’s Gross Domestic Product (GDP) to $420 billion by 2025.

Otobo who is a non-resident senior fellow in Peace Building and Global Economic Policy at the Global Governance Institute, Brussels, disclosed that the AfCFTA agreement has reached 87.6 per cent on the convergence of rules of origin with 39 out of 55 African countries having ratified the treaty.

Convergence of rules of origin he said, means that “trading begins in the continent, as many African countries will like the goods that are being created to be made in Africa, and that’s why that agreement.”


Otobo who is also the Director of Newstide Publications Board and member of the editorial board of Prime Business Africa said the treaty has the potentials to lift many out of poverty in Africa which according to him currently accounts for 17 per cent of the world’s population which are only three per cent share of the world’s trade and three percent of the world’s GDP.

He said: “Among the expected benefit of the African Continental Free Trade Area are these: one the AfCFTA will dramatically improve both intra-African trade and inter-African trade.

“Projections by the Economic Commission for Africa and the International Monetary Fund (IMF), show that AfCFTA will reduce the number of people living in absolute poverty by 30 million by 2025. As a result of AfCFTA, it’s expected that African GDP will grow by 420 billion dollars by 2025.

“It is also projected that AfCFTA will also result in a $7 trillion market economy by 2030 and $16 trillion market by 2050.

“Now of cause, one cannot trade without production of goods and services. While trade is often described as the engine of growth, businesses, in particular, private enterprises are the drivers of production and value addition,” Otobo stated.

Taking the floor, the lead speaker, Nze Chidi Duru who is the Chairman of Grand Towers Ltd, said the AfCFTA agreement which was brokered by the African Union in Kigali, Rwanda on March 21, 2018, was ratified by 24 African countries, in July 2019 at Niamey in Niger, Nigeria was the 34th nation to ratify it.

The AfCFTA which was launched on January 1, 2021 is expected through the agreement to allow free movement of goods and services across African borders and low or no tariff incentives to encourage economic cooperation and development in the continent just like in other regional blocs like the European Union, Asia, Latin America, and others.

Duru who is a successful entrepreneur stated that smart and forward-looking entrepreneurs were already exploring ways of maximizing economic opportunities the agreement presents in the African market.

“AfCFTA is an ambitious trade pact with the ambition of creating a single market for goods and services to deepen the economic integration in Africa. The intention is to reduce or eliminate tariffs and non-tariff barriers within the continent to ensure a single market for goods and services as well as to facilitate the free movement of people within the continent.

“With the effective take-off of AfCFTA on January 1, 2021, smart and forward-looking entrepreneurs have signed up to the letter and spirit of AFCTA and began to explore ways on how to derive benefit as a result, securing partnership deals and product off-take contracts across the continent—at a level never seen before,” Duru stated.

He noted, however, that despite the potential benefits coming with the agreement, there are challenges across the continent that if not addressed, would defeat the purpose of the treaty.

Duru further highlighted the challenges to include the dearth of infrastructure, logistics, lack of access to credit or capital for business start-up, unhealthy business environment, the excessive bureaucratic process in trans-border trade, lack of political will, and insecurity.

Duru said the provision of quality infrastructural facilities like power, good road networks, appropriate technology, etc would help drive the benefits of AfCFTA.

“It is proven that countries with better infrastructure do well than others without it. To this end available and quality infrastructure will enhance trade across countries and help to decrease deficit. This would further enable the movement of goods and services and the migration of people who carry with them capital and skills,” he stated.

On security, he pointed out that insecurity affects socio-economic activities as it disrupts movements of people, goods and services.

“It is important to note here that it is free movement of people that will help to boost intra Africa trade under AFCTA and help the countries in Africa to reap the benefits.

“Whilst we have seen progress in transportation across the continent, yet a lot still have to be done to facilitate the free movement of people, goods and services within the continent. It is still a journey, an arduous task and indeed very expensive to move within the continent. Regional airlines need to be consciously promoted to facilitate movement across Countries,” Duru hinted.

He called on African leaders to muster the political will to address the challenges that may affect the realization of the agreement.

Otobo stated that 21 African countries are caught in the web of insecurity, hence the need to address it.

READ ALSO: Africa’s Internet Economy To Generate $712bn By 2050 – Drayson

Contributing to the discussion, regional director, Ford Foundation West Africa, Dr Chichi Aniagolu-OKoye, said trust and honesty are essential attributes that individual businesses especially start-ups should imbibe to be able to meet and have business deals with potential merchants and investors across the world.

Aniagolu-Okoye said many African goods exported are returned because of substandard quality, and some engage in unethical conducts of exporting fake commodities which makes them lose trust.

She specifically said that Nigeria is a big market but acts of dishonesty by many business owners discourage foreign merchants who instead choose other countries like Ghana to do businesses where they have more trust.

Also an international development strategist and educationist, Dr Bunmi Oyinsan dwelt on import of AfCFTA on the status of women in Africa. She argued that the agreement does not address how women are impacted in terms of access to economic opportunities and empowerment in implementation.

Oyinsan who stated that AfCFTA would cause disruptions in economies, said it would affect women most and called for improvement of women’s opportunities in trans-border trade, adding that continental integration to be set up by African authorities should address gender inequality which makes women vulnerable.

She also called for studies on the impact of AfCFTA on women SMEs, gender analysis of the overall impact of AfCTA on women and how will the agreement impact food production with regard to the role of women in it.

The co-founder of Lekki Peninsula schools urged African authorities to include women entrepreneurs among the beneficiaries of adjustment financing made available by development finance institutions like African Development Bank (AFDB), International Finance Corporation, etc.

Commenting on the role of institutions in paving way for implementation of the AfCFTA, Obi Emekekwue, President, DelReeve Konsult Limited and the former Director and Global Head of Communications and Events Management at Afreximbank, said those who spearheaded the formation of AfCFTA knew it would have an impact on countries, some positive and negative. For that, he said that Afrexim Bank has set aside $1 billion adjustment funding to help countries cushion the impact.

Emekekwue also disclosed that the challenge of how to manage cross-border payments has been taken care of by the Pan-African Payment Settlement system introduced by the Afrexim Bank which allows people to pay for goods and services from any country in Africa with their local currency while the recipient gets exchange equivalent of the money in their local currency as well.

He also hinted that one of the challenges affecting African businesses is quality of products, and emphasised the need for SMEs to maintain standard quality products.

The next edition of the monthly SEEDS will hold in January 2022 according to the host and Publisher/Editor in Chief of Prime Business Africa, Dr Marcel Mbamalu.


MOST READ

Follow Us

Latest from Finance & Economy

Don't Miss