Despite naysayers predicting frustrations and setbacks ahead of the launch of the African Continental Free Trade area by Heads of States, news coming from the ongoing discussions indicate there are monumental agreements on the table.
While briefing the media on the state of play ahead of the 10th Extra-Ordinary Session of the Assembly of the African Union Heads of State and Government on Wednesday in Kigali, Amb. Albert Muchanga, AUC Commissioner for Trade and Industry said that a single payment system to facilitate business transactions has been assured.
The platform, he said, is key to promoting increased cross-border trade.
“In our engagements with the African Export Export Bank, we have been assured that the Bank will soon roll out a Pan-African payments system that would ensure that all traders undertake cross-border transactions that will be based on timely payments,” Amb. Muchanga said.
He explained that, with timely payments, businesses operating in Africa stand to grow rapidly.
Amb. Muchanga also announced ten measures that will be taken to make the African Continental Free Trade Area attractive to business.
The sixth key point for example, is to establishing and sustain competitiveness. “We are, in this respect, also in the process of developing Africa’s Quality Infrastructure institutions dealing with standardization, metrology (measurement systems), and quality assurance.”
He said that issues of standards harmonization and facilitation of mutual recognition of conformity assessment results on the continent is in this respect being done. “We are also reversing the use of quality and technical standards as non-tariff barriers.”
With the launch of the Single African Airport Transport Market by the African Union Heads of State and Government, in January this year, “we expect increased investments in civil aviation and with them, an increasing number of new entrants in the African commercial airline industry, greater competition, lower fares as well as increased air travel.”
With these positive developments, he said that business leaders will be invited to meetings to discuss how to increase their investments on the continent, which is currently 12% of total investments, according to the International Chamber of Commerce. The figure for Asia is 33%.
WHAT IS THE AFRICAN CONTINENTAL FREE TRADE AREA?
The African Continental Free Trade Area is an economic space encompassing all 55 member states of the African Union to promote duty free flow of goods and services once it is established.
It will be a market of 1.2 billion people with geographic spread of 30 million square kilometers.
Two recent decisions were made by the January, 2018 Summit which will make the market more attractive. These are the adoption of the Single African Air Transport Market and the Protocol on Free Movement of People, Right of Residence and Right of Establishment.
These two, along with the African Continental Free Trade Area project are flagship projects of the African Union Agenda 2063.
Through these projects, members are building an African internal market. During this year, work will also begin on negotiating protocols on competition, investment and intellectual property rights to create a market space of fair competition, harmonized investment policies and a regime for protection of intellectual property rights in order to spur innovation.
Trade and production go hand in hand. In this connection, we also have a programme of development of regional value chains in order to promote rapid industrialization in Africa.
The promotion of industrialization is vital because 42% of intra-African trade is currently composed of industrial products.
In this connection, industrialization will be key to increasing the share of intra-African trade in Africa’s total trade as well as raising Africa’s share in global trade which has been stagnant since the early years of the independence of African countries.
With this initiative, Intra-African Trade is expected to grow by 53% by 2022 and Africa’s exports to the rest of the world grow by 6%.
ARE THE LEGAL INSTRUMENTS ESTABLISHING THE AFRICAN CONTINENTAL FREE TRADE AREA READY FOR SIGNATURE?
The legal instruments to establish the African Continental Free Trade Area have been considered by African Union Ministers of Trade as well as Ministers of Justice and Legal Affairs. The instruments were discussed by the Executive Council which is the clearing house for the Summit.
The legal instruments to be placed before the Executive Council and thereafter the Summit are:
Agreement Establishing the African Continental Free Trade Area;
Protocol on Trade in Goods;
Protocol on Trade in Services; and,
Protocol on Rules of Procedure on the Settlement of Disputes.
“At this stage, I can say with confidence that the legal instruments establishing the African Continental Free Trade Area will be ready for signature by the African Union Heads of State and Government when the meet on 21st March, 2018, two days from today,”Amb. Muchanga said.