Arica’s extreme vulnerability to the disruption of international supply chains during the COVID-19 pandemic highlights the need to reduce the continent’s dependence on non-African trading partners and unlock Africa’s business potential. While African countries are right to focus their energy on managing the immediate health crisis, they must not lose sight of finalizing the Africa Continental Free Trade Agreement (AfCFTA), which can be a tool to help them do just that.
Africa’s economy is highly dependent on international markets—for both its imports and exports. Given that an estimated 53 percent of African imports originate in countries that have been highly impacted by COVID-19, the pandemic is interrupting the region’s access to critical products. With two-thirds of African countries being net importers of food and medicine, global trade restrictions and cross-border blockages risk creating shortages and increasing the cost of items essential to mitigate the immediate effects of the pandemic. At the same time, global supply chain disruptions are expected to result in export earnings losses of $101 billion, with an estimated $65 billion for oil-producing countries and massive hits in other export sectors, such as the garment and cut-flower industries. Similarly, the pandemic has seriously disrupted key services industries on the continent, including tourism, transport, and logistics services.
The operational launch of the AfCFTA—originally scheduled for July 2020—is now postponed. The next round of negotiations, scheduled for May 30, will likely not happen before November or December. Wamkele Mene, the newly elected secretary-general of the AfCFTA Secretariat, has noted that remote negotiations were impossible, due not only to connectivity problems, but also the need to translate everything into the continent’s four official languages. (These schedule changes are pending ratification by the member states.)
Even without the pandemic, however, the AfCFTA’s launch agenda was ambitious, with key elements of the AfCFTA, such as rules of origin, tariff reductions, and services schedules, yet to be finalized; implementation challenges (e.g., Nigeria’s border closures in response to smuggling); and challenges created by bilateral trade deals with non-African countries potentially undermining the broader integration agenda.
As the AfCFTA’s launch has been postponed, the Secretariat—together with the African Union’s trade commissioner and member governments—has directed its efforts at two different objectives: 1) continuing the flow of trade as much as possible, especially of essential products, and 2) starting longer-term planning about how the AfCFTA can help Africa be more resilient in the face of future crises. Had the AfCFTA already been operational when the pandemic hit, leaders would have been more empowered and would have had more tools to address both of these objectives.
“Trade corridors” or “green lanes” expedite and ensure the free flow of essential commodities and are essential to mitigate the impact of the pandemic. The AfCFTA contains annexes on trade facilitation, customs cooperation, and transit that, if implemented, would require State Parties countries to put in place infrastructure to facilitate cross-border trade, on the basis of which trade corridors could easily be established. Furthermore, the AfCFTA envisions the establishment of a Sub-Committee on Trade Facilitation, Customs Cooperation and Transit, which would be able to oversee implementation and facilitate coordination of customs processes, including for expedient delivery of essential products across the continent—tasks sorely needed right now.
BROOKINGS.EDU | Landry Signé and Colette van der Ven
April 30, 2020