London, 1 April 2022 (TDI): Following the meeting with the Secretary of UK for International Trade and President of The Board of Trade, Anne-Marie Trevelyan; and Minister for Africa, Latin America & Caribbean of the UK, Vicky Ford, Secretary-General of the African Continental Free Trade Agreement (AfCFTA) Secretariat, Wamkele Mene assisted the 8th Annual Africa Summit.
8TH ANNUAL AFRICA SUMMIT
The Summit was held by the London School of Economics and Political Science (LSE). At the beginning of the speech, Mene stated that the world is facing a twin crisis. Furthermore, according to Mene, those crises are the pandemic, which has not gone away, and also the geopolitical tensions.
Mene then added that those tensions in the geopolitical context are truly unprecedented in many respects. From the perspective of public health; March 1st this year marked one year since COVID-19 vaccines were first distributed by an African country.
Since then, African countries have only been able to procure 633 million vaccines with over 60% of these doses already administered. Today, less than 10 percent of Africans count on the full vaccination.
Furthermore, the entire continent doesn’t have the capacity to produce its vaccines, not just because of intellectual property rights but because of the continent’s weak public health systems.
Moreover, the pandemic has already pushed 150 million Africans back into poverty. As mentioned by Wamkele Mene, “Around the world, organizations estimate that there are between 15 and 16 trillion US dollars of cumulatively stimulus packages and economic recovery tools. According to Mene, the developed countries have extended those stimulus packages to their economies with the objective of rejuvenation their economies.”
African countries do not have such financial space for economic recovery under the context of the pandemic which makes the situation even worse.
AFRICA AS AN IMPORTER OF FOOD
Regarding the geopolitical crisis, “Africa is a net importer of food and so anything related to that causes an imbalance in food security”, said Wamkele Mene. Wheat plays a significant role in African food sustainability, and Russia is the world’s largest wheat exporter, while Ukraine is the world’s fifth-largest wheat exporter.
From 2018 to 2020, Africa imported $3.7 billion of wheat from Russia (32% of Africa’s total wheat imports) and another $1.4 billion from Ukraine (12% of Africa’s total wheat imports). Eritrea is 100 percent dependent on wheat imports from Russia and Ukraine, and other African countries also depend to varying degrees on wheat from these two countries.
So as a result, Egypt has seen a 50% rise in the price of bread that does not receive government subsidies and Tunisia’s central bank has warned of rising inflationary pressures in the country under the context of the Russian – Ukraine crisis.
AfCFTA, A POTENTIAL GAME CHANGER IN THE CRISES
According to the crises, Mene stated that the nexus between peace, development, and of course health could not be stronger in terms of the need to make sure that we focus on these three pillars for development. Mene put special focus on the development of the African continent; as the place where AfCFTA can be a game-changer for the continent.
The agenda 2063 embedded the AfCFTA. It is one of the flagship projects of the African Union, seeking to promote inclusive and sustained economic growth and accelerate the integration of the continent. With the global challenges happening around the world, the integration of the African continent has never been more crucial.
ESTIMATIONS FOR THE POSSIBLE BENEFIT OF THE AfCFTA
Wamkele Mene shared data during his speech from the World Bank. The World Bank offers several estimations regarding the implementation of the AfCFTA. According to those estimations, when AfCFTA enters into force effectively by the year 2035; the African continent will have the opportunity to lift 30 million Africans out of abject poverty, and 70 million Africans out of moderate poverty.
The AfCFTA will also contribute 450 billion dollars to Africa’s GDP, which is almost 7% of Africa’s GDP which is projected to be at that time. Another important aspect is that the wages for both skilled and unskilled workers will increase by 10% for unskilled workers, and 9.5% for skilled workers.
The reason why AfCFTA has such potential is that the representatives designed it comprehensively. That means that it covers investment protection, intellectual property rights, competition policy, digital trade; and other areas that support a region or a country’s economy.
To fulfill the expectation, AfCFTA is always on the road. AfCFTA is now in the second negotiation phase which focuses on competition, intellectual property rights, investment, and so on. As said by Wamkele Mene; “we aim to conclude these pillars by the end of this year, and the conclusion of these pillars will greatly contribute to deepening integration on the Africa continent.”
FOUR PRIORITIES IN THE DEVELOPMENT OF THE VALUE CHAIN UNDER AfCFTA
To roll out the strategy for value chain and productive capacity improvement under the context of the AfCFTA; Wamkele Mene emphasized four priorities among various sectors.
They are the automotive sector, agro-processing, pharmaceuticals, and transport and logistics. In 2019, the African continent imported 15 billion dollars’ worth of pharmaceutical products, which demonstrates two things.
First, is African countries’ productive capacity in the area of pharmaceuticals. Second, is that the public health needs of the African continent have to rely on global value chains; and the access to public health is reliant on the availability of these pharmaceutical products that come from other parts of the world.
CONGRATULATIONS FROM THE SECRETARY-GENERAL
Looking back to the experiences that happened on the continent, Mene commended three countries in the speech. The three of them have made progress in the production of value-added products and processing capacity.
Two of them are Ghana and Cote d’Ivoire; which have decided that there will be no more export of raw cocoa. According to Mene, they are focusing on the production of value-added products that emanate from cocoa as a primary commodity.
The other one is Gabon. Today, Gabon is one of the leading exporters of high-end furniture on the continent; which is the result of a decision that Gabon made a decade ago. The Government ceased the exports of raw timber and decided to process the raw timber in Gabon.
According to Mene, it is necessary to act now; above intra-African success, it might take time to achieve a better position in the value chain. AfCFTA is an umbrella for African countries to take action together and gain common interests together.
Once AfCFTA implements these value chains and the strategies that underpin them; there will be a potential to contribute over 11 billion dollars annually in production. The representatives also expect to contribute over 5 billion dollars annually in intra-Africa trade.
More significantly, the development of these value chains can create over 700 thousand jobs. According to Mene out of those 700k jobs, 55% of which will be for women and youth.
AfCFTA NEEDS TO SEIZE NEW OPPORTUNITIES IN TODAY’S WORLD
Wamkele Mene emphasized several tools and opportunities that AfCFTA and African countries must pay attention to. Mene included there a pan-African payment system, digital trade facilities, intellectual property rights, competition policies, and the fourth industrial revolution.
To seize the opportunity for development, AfCFTA has already launched the pan-African payment system recently with African banks. AfCFTA also focuses on supporting digital trade; which is an area that has transformative potential and has already made difference in eastern Africa.
To promote intellectual property rights, and competition policy; the designers of AfCFTA dedicate themselves to making it more comprehensive and sustainable. Also, regarding the fourth industrial revolution trend, AfCFTA encourages African countries to develop their processing capability and high-valued industry.
The speech of the Secretary-General of the AfCFTA Secretariat provided a clear picture of the main challenges. It also provided a clear picture of the pillars of development; then the priorities of AfCFTA’s work, and its significance of AfCFTA.