Digital trade the only tool for Africa’s economic recovery - Wamkele Nene
Africa Continental Free Trade Area secretary-general Wamkele Mene concedes that his vision for the secretariat has been transformed by COVID-19 and that he now has to go back to the drawing board and reprioritise the secretariat's work.
JOHANNESBURG - Africa Continental Free Trade Area secretary-general Wamkele Mene said he had gone back to the drawing board to review his priorities post the COVID-19 pandemic and digital trade may be the only way to awaken the sleeping giant.
Mene has recommended that the launch of the trade zone that was planned for 1 July should be postponed due to the COVID-19 pandemic, but he believes it’s the only tool for economic recovery on the continent.
Eyewitness News spoke to Mene on Monday, who said he and his team were now waiting for heads of state and government to say yes or no to this recommendation, and for Ghana, the seat of the secretariat, to reopen its borders, also closed due COVID-19, for them to move into their new offices.
WAMKELE MENE IN OFFICE
Mene was sworn-in on 19 March at the African Union Headquarters in Addis Ababa, Ethiopia. He leads the secretariat and is responsible for the overall management of its day-to-day functioning. His responsibilities include implementation of the AfCFTA Agreement and strategic collaboration, stakeholders’ engagement and resources mobilisation for the operationalisation of the AfCFTA Agreement.
When he congratulated Mene on his election, the chairperson of the AU Commission Moussa Faki Mahamat said: "You have been elected on the basis of your experience and skill. The task that awaits you is quite gigantic but exhilarating because you will be working on the most emblematic project in the history of the African Union. The African Free Trade Zone is a necessity for Africa to strengthen its integration."
At the time, Mene outlined his priorities, beginning with creating decent jobs and improving livelihoods. He said he would bring alive the market of 1.2 billion people, its combined GDP of US$2.5 trillion and more than 400 companies that earn annual revenues of US$1 billion or more.
He was, however, cautiously optimistic, citing key challenges including countries that abandon the rules of the multilateral trading system and COVID-19. He said while the AfCFTA was the answer to the first challenge because it would consolidate and advance continental market integration objectives, the second challenge would limit its impact.
"Through the AfCFTA, we have an opportunity to reconfigure our supply chains, to reduce reliance on others and to expedite the establishment of regional value chains that will boost intra-Africa trade," said Mene.
As soon as he had made this undertaking, both Ethiopia and Ghana went into lockdown, and he and his team had to work from Addis Ababa, waiting to go to Accra, Ghana, when that country reopens its borders after lockdown.
WHAT AfCFTA HAS TO OFFER
"What the negotiations were targeting was reduction in value-added production and goods to foster industrial development in Africa," said Mene.
In Mene’s vision, the AfCFTA will ensure that rules of origin support Africa’s industrial development objectives. He wants car manufacturers in African countries to use African components that can be manufactured even by countries that don’t have an automobile strategy.
He sees more agro-processing because of its high-value addition and contribution to food security, as well as centres of excellence that will benefit not only countries that are industrialised like South Africa but all countries.
"Ghana, Nigeria, Rwanda, Kenya, Uganda, Morocco and South Africa all have an auto strategy – all of them see a potential for inward investment if they establish a manufacturing base for automakers to come and invest. We can harness this through the agreement into a pan African value chain of automobiles and other sectors."
He said these and other sectors would have an immediate impact on job creation and Africa’s ability to produce in what he called a massive scale.
Fifty-four of the 55 countries have signed the agreement, but only 29 have ratified it, but Mene said this signalled political will and commitment to market integration by the heads of state and government.
CAN AfCFTA SURVIVE COVID-19?
"The first few weeks have been very challenging because I was sworn in on the 19th of March and the African Union shut down the following week, and so my vision of establishing the secretariat has been transformed by COVID-19. Some of the priorities have been changed. Industrial development, intellectual property and how they can be of service to public health is also now a priority. So I’ve had to go back to the drawing board as a result of COVID-19."
Mene said operationalisation of the trade zone must now include trade tools to fight not just COVID-19, but other pandemics that would come in future.
He said a lot of time-consuming outstanding work still needed to be concluded, but one of the difficulties was that all countries needed translation for all communication sent to them and back to the secretariat. He said usually, trade negotiations required countries to meet in one place for two to three weeks at a time, but that was not possible for the foreseeable future.
Established blocs like the Southern African Customs Union (Sacu) and the Economic Community of West African States (Ecowas) are expected to collectively make their offerings to the AfCFTA but this process is now delayed.
"Sacu and Ecowas are customs unions – they have to agree on products that they are offering to one negotiating party. They move as a collective, and between them it is a bilateral negotiation. But that process is quite detailed domestically and regionally because all members of that customs union must be in agreement. If a country is in a customs union there is no other way to come to a joint offer other than negotiating internally as a customs union, and then Sacu presents to Egypt or to Ecowas."
Mene said while Sacu and Ecowas had not concluded their offers, they were both at advanced stages of their internal processes, and they would have concluded in April, in time for the May summit that AU chairperson President Cyril Ramaphosa was expected to host.
He said digitisation was already a priority before for the AfCFTA before COVID-19, and its advantages were even more pronounced now. He said the African Union was already working to develop digital trade infrastructure to enable the trade agreement to be effectively implemented.
"I’m talking from a customs point of view and for goods-in-transit, it’s very important to establish trade facilitation digital platforms but we don’t have them yet at the pan-African level, which is what we are striving towards and this crisis has underscored the need for us to accelerate that work and rely more on digital trade platforms," said Mene.
AfCFTA ONLY HOPE FOR AFRICA RECOVERY
"This is a huge undertaking by Africa. It’s unprecedented that we are creating this biggest trade agreement in the world. Most of the 1.2 billion people are young, with a middle-class purchasing power that were rapidly growing prior to COVID-19.”
Mene said a single market was very important and would take Africa towards being the most attractive investment destination with shared benefits.
He said he hoped the agreement would be in operation in six to nine months’ time post-COVID-19, and that it would boost trade recovery beyond the current intra-Africa trade of only 18%, and achieve annual economic growths of between 5% and 6% for most African countries, as was the case before COVID-19.
"Very few countries have the fiscal policy space to provide large stimulus packages that go into trillions of dollars. The US has just provided a bailout package of over $60 billion for the airline industry in a combination of loans and grants, but that is going to be difficult for many African countries. Our only tool for economic recovery on the African continent is to accelerate intra-Africa trade."