This blog post is regarding the African Free Trade agreement better known as the AfCFTA (African Continental Free Trade Area) that was actioned on the 1st January, 2021. I was lucky enough to go to the get into the zoom meeting where the new trade union was being discussed, which took place on New Years day. I wanted to do a quick summary blog post on the points mentioned and key things that I took away from the meeting which stood out to me - I will link their website for the African Free Trade union at the end of this post for anyone who wants to go and read in more detail. This post is actually overdue but nonetheless, let us get into it and start to break this trade area down!
Firstly, I want to highlight what the organisation has highlighted as their mission. As an initiative under the African Union [AU] - which aims to promoting Africa’s growth and economic development by championing citizen inclusion and increased cooperation and integration of African states.
The AfCFTA will cover a market of over 1.2 billion people. There are 54 out of 55 countries in the continent that have subscribed to the free trade area. The only country that did not is Eritrea. While I did share some information whilst I was listening to the meeting, I asked people on my Twitter account to share what their views were about the free trade area. Many seemed optimistic about it, but still the hesitant scepticism of the left creeping their way in and ruining it somehow, was present in some people's responses.
Who will this benefit?
The AfCFTA secretariat trade agreement was always pledged to be moved to Accra, Ghana; with the president Nana appealing to the AU commission to fast track recruitment of the staff that will be working in the secretariat, as he was eager to launch the agreement. If you do not know what that means - think of it like an embassy or an office for the AfCFTA, like a base - this will be in Ghana. The Secretariat of the African Continental Free Trade Area (AfCFTA) has now officially opened in Accra, Ghana, with the president himself sharing some words during the zoom meetings to describe it as: "there is a new Africa emerging full of aspiration and purpose. With an ambition to become self reliant“ he continues, to say “a new dawn of continental trading in Africa has begun, for Africans” - Nana Akufo.
I found it interesting that the President of Ghana highlighted that it was "for Africans". In the past, much trade in Africa has not had much if any, direct affect on the quality of life of those who live in the continent. You can clearly see that the intent of the AU is to change this. Similarly, another speaker Wamkele Keabetswe Mene, who is the secretary general of the AfCFTA echoed the words of the Ghanaian president. He stated:
“we really don’t have anything to prove anything to the rest of the world, what we owe is 1.2 billion Africans to make the AfCFTA a reality. We need to make sure this agreement resonates with SMEs, women in trade and young Africans”
To go into more detail, there was a clear focus on the economical groups and industries whom development should be more focused on. Cyril Ramaphosa, the President of South Africa mentioned that it is imperative for the AfCFTA to contain and propel trade agreements that boost the development of Small and Medium sized enterprises [SME’s] and not only big companies. He took it a step further and appealed for the propelling of women in trade, to be included in the protocol of the trade agreement. The reasoning behind this was that if we want to see the inclusion of women in the financial sector, we need to ensure our trading benefits the women of our continent. Not only women, but the more vulnerable groups in terms of their economic power, so that includes the youth too.
Supporting Smaller Sellers
I think this will be a more attainable vision under the African free trade area, because it includes not only large companies and SMEs, but also Freelancers; I will go into more detail about how these entities will be able to register onto the trade area in the following section. However, I wanted to highlight some interesting facts that illustrate why this move by the African Union is key to developing the economic status of African women and youth:
The job market in most African countries today, especially for young graduates, is difficult. Without being able to find a job that suits them, young graduates are rapidly moving towards the creation of their own personal activity - taken from article on the growing trend of freelancing in Africa by africa.com
Of the women employed in Sub-Saharan Africa, 74 percent of them work in the informal sector which is significantly greater than the 61 percent of men in the region who are informally employed. Inequalities and discrimination in education, employment and households in addition to concerns about safety and the dominance of agriculture and self-employment in the region contribute to women’s continued exclusion from the formal economy - taken from article on the state of female employment in Africa by Sarah Olk (2018) on Bolken Mag.
Based on this, this shows that the direction the African Union is going (where trade is concerned) is progressive, as they are clearly trying to focus on groups who are in need.
An industry that will be reshaped due to this structural advancement in the continent, is the fashion industry. There was a segment about this during the zoom meeting and it made me particularly excited and even somewhat emotional. Think of it this way: think of all the different material sourced from Africa, the different prints such as Ghanaian Kente, the Congolese Liputa, the Nigerian Aso oke, the South African Shweshwe and the Kenyan / Tanzanian Kikoi, just to name a few examples. All consist of various patterns and textiles that identify people from all corners of the continent, from different walks of life. Below is a 15 second clip taken from the African Union zoom meeting, which explores the viewpoints of African fashion designers on the new free trade area. One of the voices from the video mentions that now more than ever, African fashion designers need to be "relentless about blending, mixing and matching".
Imagine the African fashion industry being able to combine and merge all these materials together. The elimination of any cross-border tariffs or transaction costs means that those women, men and young freelancers in the fashion industry will have access to unlimited resource from across the continent. And Africans will be able to produce more products that display a dynamic, trendy and ever-evolving Pan-African identity.
Of course it will not only be the fashion industry that reaps the benefit of this cross-continental trade. Benedict Okey Oramah discussed how as trading commences under the AfCFTA, Africa will welcome the incredible opportunities this gives all African businesses. An analogy he used went like this: Maybe Nigerians will start buying processed rubber from Ivory Coast, and the Congolese will start buying pharmaceuticals from Egypt and South Africa rather than elsewhere... we will open a new world, where African businesses will conduct trading seamlessly. This will be done through the successful use of the “African trade gateway”.
How will African businesses seamlessly communicate?
The African Trade Gateway
There will be a digitalised platform which is referred to as the 'African Trade Gateway' - a hyper networking app built to criss-cross the entire continent, enabling a unified credit referencing system. This will allow every SME, start-up, social enterprise, NGO and Freelancer to register themselves. The purpose of this app will be to digitalise the importing and exporting transactions under AfCFTA. Every business that registers to the trade gateway, will be generated an AfCFTA number to identify themselves with. This is described as "a single pan-African, trusted business identity".
The African Union efficiently points out that African trade cannot return to the state it was in before, referring to being bogged down by paper work, inefficiencies, weak market intelligence and "infrastructure bottlenecks" - I had never heard this last phrase before, so I had to look into what was meant by this; it is essentially what is caused by workloads forming too heavily, before the production process can accommodate that quantity of workload. Now, with the African Trade Gateway, "no one shall be left behind". Benedict Oramah described this as being "committed to using digital technology to knock down the borders, and unleash the power of inter-regional trade".
Benedict O. Oramah, who assumed the position of President of the African Export – Import Bank in 2015, summarised the key functions of this digital element. The gateway will allow African businesses to:
Conduct due diligence on potential business partners seamlessly
Receive and make payment for trade processes in national currencies
Identify new potential trade partners
Identify new markets and investment opportunities
Build more supply chains and business relationships
Access specific trade and investment regulations
Establish themselves as a business entity
Use abundant raw materials to create more jobs
The UN has also pledged its full support of the AfCFTA. Amino Muhammad, the fifth Deputy Secretary-General of the United Nations, spoke on the free trade area agreement and said that the area opens an enormous facility for a more resilient Africa. She believes that the AfCFTA has transformational potential for Africa and it is projected to boost inter-Africa trade by 25-30%, which is equivalent to around $36bn to $43 billion. Amino pledges that
"the United Nations family will continue to work closely with the African Union commission and the member states, to support the private sector as we strive to reap the full potential of this pioneering initiative".
More to unpack as this develops. Let me know your thoughts on this by leaving a comment!
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