Africa to Push Ahead With Trade Deal Even If Virus Rebounds
(Bloomberg) -- An Africa-wide free-trade agreement is unlikely to face any further delays even if a second wave of coronavirus infections hits the region, according to its top official.
“If the pandemic continues into 2021, we will develop the necessary public-health protocols to continue and to push on with the implementation of the African Continental Free Trade Area,” Wamkele Mene said in an interview at the Bloomberg Invest Global virtual conference on Tuesday. The secretariat will take advice from health officials as it works to implement the deal and revive economic growth on the continent.
While the agreement entered into force legally last year, commerce due to have started on July 1 has been delayed as the pandemic set back negotiations to lay the foundation for trade in goods, including tariff concessions. When fully operational by 2030, AfCTA could be the world’s biggest free-trade zone by area, with a potential market of 1.2 billion people and a combined gross domestic product of $2.5 trillion.
Mene said the continent’s rapid and coordinated approach to tackling the virus and introducing lockdown measures, partly due to experience in curbing infectious diseases, stands it in good stead to develop public-health measures.
Fifty-four of the 55 nations recognized by the African Union have signed to join the area -- Eritrea is the exception -- while 28 countries have ratified the agreement.
Nigeria, the continent’s biggest oil producer, has yet to ratify the deal because of concerns about trans-shipments, where goods could enter the free-trade zone from countries that are not party to the agreement, Mene said.
While the window to implement the deal is “very narrow,” African heads of state want it to move as quickly as possible once conditions allow, he said. Increased trade could revive economic activity that has been affected by the virus, which has also highlighted the need for regional value chains across Africa and enhanced manufacturing capacity on the continent, he said.
The health and economic impact of the virus will result in sub-Saharan Africa’s first recession in 25 years, according to World Bank estimates. African finance ministers have called for an emergency economic stimulus of $100 billion, including debt-service waivers to combat the effects of the pandemic.
Africa lags other regions in terms of internal trade, with intra-continental commerce accounting for only 15% of the total, compared with 58% in Asia and more than 70% in Europe. The agreement is meant to help change that by lowering or eliminating cross-border tariffs on 90% of goods, facilitating the movement of capital and people, promoting investment and paving the way for a continent-wide customs union.
©2020 Bloomberg L.P.