Infrastructure Issues Posing Challenges to AfCFTA, Official Says
Officials are hopeful the African Continental Free Trade Agreement (see 2108180020) will continue to facilitate more trade next year, but several obstacles are still hindering the deal, including a lack of customs infrastructure and export capacity among some member states. Wamkele Mene, secretary general of the AfCFTA secretariat, said members are continuing to show progress but much more work needs to be done, even as the AfCFTA inches closer to full ratification among the African Union's 55 states.
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“This agreement is very ambitious both in scope as well as in depth of liberalization,” Mene said during a Nov. 29 Brookings Institution event. “There's a new sense of commitment and a new spirit of political will to make sure that this works.”
Mene said countries are trading 87.6% of goods under the agreement and expect to pass the 90% threshold early next year. But some countries are still “establishing the infrastructure that is required for trade to happen in a commercially meaningful sense,” he said. The AfCFTA is working with the World Customs Organization to aid countries that lack certain customs procedures and other infrastructure, Mene said.
But even though some countries may not have the infrastructure in place, they still want to ratify the agreement, Mene said. “They want to develop their institutional capacity as they implement the agreement itself.”
He also said the agreement has faced challenges because of the “different levels of export capacity” among African countries. While some countries can benefit from preferential tariff treatment immediately, Mene said it has been a “huge challenge” helping other countries benefit because they don’t have the trading networks and capacity in place. “Those countries may suffer short-term revenue losses as a result of reduction of tariffs or as a result of elimination of tariffs,” Mene said.
The AfCFTA is working with the African Export-Import Bank to provide funds to countries that are losing revenue from the reduction in tariffs under the deal, Mene said. He hopes the deal can eventually allow member countries to “reduce our reliance on tariffs as a revenue-generating tool,” and to instead “enhance our productive and industrial development capacity.”
Although the lack of trade infrastructure in some countries is hindering the continent's trade competitiveness, the agreement is proving that “the market is there,” Mene said. The countries that have ratified the deal "are saying we are legally committed to reducing barriers to intra-Africa trade, and we are politically committed to making sure that intra-African trade succeeds.”
Mene also criticised recent travel bans imposed on some African countries due to outbreaks of a new COVID-19 variant, Omicron, calling them “disguised restrictions to trade.” Although he didn’t name specific countries, the U.S., Canada, the United Kingdom and the European Union have all announced travel restrictions. "There are developed countries around the world who have procured five times more vaccines than they need for their populations. And yet, when we have these variants that are developing on the African continent, their immediate reaction is to shut these people out," Mene said. He called the travel bans "completely in disregard for the global trading system.”