“Vast majority of African CEOs positive about AfCFTAct” – Opinion by Patrick Utomi
The year 2022 is once again underlining the devasting costs of Africa’s continued reliance on external markets and the imperative of building resilience through stronger intra-African trade.
According to the United Nations Economic Commission for Africa (UNECA), Africa’s real GDP growth is projected to contract by 0.7% due to the Ukraine crisis, and inflation is expected to rise by 2.2%, pushing more people into food insecurity and poverty.
This follows the Covid-19 pandemic which led to the worst economic recession in Africa in almost 50 years and pushed 47m people into extreme poverty, threatening to all but erase the strong gains Africa has made in recent decades.
The Covid-19 pandemic and now the Ukraine crisis has revealed the economically devastating impact of Africa’s continued dependence on external markets, even for basic agricultural commodities. Africa imports around $40bn worth of food annually and the soaring wheat and sunflower prices in the wake of the Ukraine crisis threatens food security in the region.
Russia and Ukraine are major exporters of wheat and sunflower to Africa. Wheat consumption in Africa is projected to reach 76.5m tonnes by 2025, with 63.4% of this projected to be imported from outside of the continent.
Already the region is facing acute price shocks and supply chain disruptions. This is compounded by concerns over fertiliser shortages which could potentially disrupt local agricultural production and place further pressures on food security.
In a context where Africa accounts for 16% of the global population, the food security implications of the Ukraine crisis could prove even more far reaching than the impacts of the Covid-19 pandemic.
AfCFTA holds huge potential for trade-led development However, just as Covid-19 catalysed collective African action and a united response, the current geopolitical crisis must be viewed as opportunity. With 60% of the world’s arable land, the fastest growing population and an integrated market under the AfCFTA, the opportunity exists for Africa to takethe necessary steps to ensure food security through greater intra-African trade and reduce reliance on food imports from outside the continent.
The AfCFTA, which creates a single continental market for goods and services, with free movement of businesspersons and investments, provides an opportunity for Africa to take a strategic approach to wean itself off the dependence on external partners for its development ambitions.
The AfCFTA, which seeks to bring together 55 African countries and create an integrated market of 1.3bn people, with a combined GDP of over $3 trillion, holds enormous potential for Africa’s trade-led development.
The PAFTRAC Africa CEO Trade Survey Report 2022: Assessing the impact of the AfCFTA on African Trade presents the findings of an annual private sector survey conducted by PAFTRAC. The survey, which was administered to over 800 respondents, sought to assess African private sector sentiment regarding the AfCFTA and African trade prospects.
The survey explored the major constraints faced by the African private sector with a view to informing policy discourse and reform. The report sheds light on the private sector’s perspectives on Africa’s current and future economic and trade environment, particularly in the context of the start of trading under the AfCFTA and post-pandemic recovery.
The positive sentiment expressed by survey respondents demonstrates the potential of the AfCFTA and the eagerness of Africa’s private sector to take advantage of the market access opportunities it offers.
However, access to trade information, trade-enabling infrastructure and trade finance again emerged as key constraints that need to be addressed to ensure that intra-African trade opportunities can be exploited to the benefit of African SMEs.
One major advantage of the AfCFTA is that it can enable aggregation across borders so that African countries can pool products in the volume and quality that make them more competitive in global markets. This is especially attractive if large trading companies can do for Africa through aggregation, what companies like Marubeni did for Japan.
PAFTRAC members hope that this survey proves instructive and helps shape policy discourse and public- private sector engagements on policy, as well as the regulatory reforms required to support African SMEs to take full advantage of the AfCFTA.
Professor Patrick Utomi is Chairperson of the Pan-African Private Sector Trade and Investment Committee PAFTRAC
Published By :- African Business
Published On :- June 17, 2022
