African leaders need to work closely together to ensure that the Continental Free Trade Area (AfCFTA) achieves its role of fast-tracking economic growth and transforming the continent.
On the sidelines of the ongoing World Economic Forum Annual Meeting, President Paul Kagame on Tuesday morning in Davos, co-chaired a breakfast gathering of African leaders and friends of Africa on the African Continental Free Trade Area (AfCFTA).
“For so many decades in history there are leaders on our continent who tried to unite Africa, alongside making sure that Africa can also trade within itself and countries with each other and so on,” President Kagame noted.
According to the Rwandan leader, African leaders need to really, “show the political will and put it to work and make sure that things work because they’re working for us in the end. And then when they have worked for us, we work very well with the rest of the world to our benefit.”
President Kagame also wants the youth on the continent to be part of this shift, “Visa restrictions or removal of those restrictions and so on, and then allowing the young people of our continent who constitute the biggest majority of our population.”
Another major items of the discussions was the digital transformation of customs and borders in Africa and how it can be improved to provide efficiencies in processes, such as administration at customs and borders.
This, discussants agreed, can yield trade gains worth US$20 billion a year on the continent.
A new report by the World Economic Forum, Growing Intra-Africa Trade through Digital Transformation of customs and borders, was also launched at the Annual Meeting 2022 in Davos, provides a pragmatic perspective on the non-tariff barriers in border and customs services that can be exponentially improved through digital transformation to increase intra-Africa trade.
The report, written in collaboration with Deloitte, is launched at the convening of the Forum Friends of the Africa Continental Free Trade Area (AfCFTA), a multistakeholder group that supports implementation of the goals set out by AfCFTA through public-private collaborations. The group comprises Paul Kagame, President of Rwanda; Wamkele Mene, Secretary-General of the African Continental Free Trade Area Secretariat; Patrice Motsepe, Founder and Executive Chairman, African Rainbow Minerals; and Jim Ovia, Chairman, Zenith Bank among others.
The AfCFTA implementation, which started in January 2021, has the potential to increase intra-African trade from its current 18% of total trade to 50% by 2030. It also has the potential to lift 30 million people out of extreme poverty. However, achieving its full potential depends on putting in place significant policy reforms and trade facilitation measures.
Kavitha Prag, Africa Lead, Enterprise Technology and Performance at Deloitte Africa, said: “The African Free Trade Area agreement can be a great catalyst for Africa’s growth and development, but its full realization hinges on the introduction of efficiencies, including the improvement of customs processes. Digital transformation of border posts and customs is thus a crucial and necessary step in the implementation of the protocol, especially for many of Africa’s landlocked countries.”
Various countries and the regional economic communities are making efforts to build better trade networks enabled by world-class logistics networks that can withstand recent supply chain shocks such as the COVID-19 pandemic and geopolitical tensions.
The report highlights insights from the Logistic Performance Index as well as key insights from case studies demonstrating the quantifiable value of digital reforms in countries such as Ghana, Kenya and Uganda. The paper is a call to action for more integrated digital reforms that can drive higher impact through public-private partnerships that sets the course for Africa’s post-pandemic recovery and growth.
“Even after tariffs are lowered, and simplified procedures put in place, the full benefits of the AfCFTA will not be realized unless non-tariff barriers to trade are also addressed,” said Chido Munyati, Head of Africa at the World Economic Forum. “Policy-makers can make a difference by implementing digital solutions.”
The report calls on the following policy support to enable digital transformation:
– Legislative support and acceptance that embraces new practices such as e-signatures or the use of drones to monitor cargo
– Buy-in from the various agencies that enable these operations to embrace digital reforms and embed them in their processes
– Take action based on demand-driven interventions that lead to higher adoption of rates by all organizations and position intra-Africa trade as more cost and time competitive
– Develop skills of services agents that can maximize the potential of the digital solutions
– Better co-ordination among AfCFTA members to establish Single Customs Territories
The World Bank notes that while African exports of goods and services have seen their fastest growth in the past decade, the volumes remain low at just 3 per cent of global trade.
The bank says boosting intra-regional trade requires improvement of physical integration, such as cross-border energy, transport and connectivity infrastructure, strengthening cooperation by harmonising customs rules and procedures, and facilitating business integration through regional electronic settlement systems, an electronic cargo-tracking system, and easing restrictions on services trade.
When Africans stand up for Africa, only then will our people prosper.
— President of Zimbabwe (@edmnangagwa) May 24, 2022