AfCFTA put on hold as Africa prepares for coronavirus

Legislation | | MIC Customs Solutions |

All Africa can do is wait and see the toll coronavirus takes - but this leaves little time for trade agreements.

The eagerly anticipated, much-lauded free trade agreement that aimed to cover much of Africa has been put on hold as the continent braces itself for coronavirus.

According to Reuters, the implementation process that was set to have begun on July 1st 2020 will not now go ahead as previously agreed.

Mitigating circumstances

Speaking to the news provider in a conference call, secretary-general of the African Continental Free Trade Area (AfCFTA) Wamkele Mene said: "It is obviously not possible to commence trade as we had intended on under the current circumstances."

However, he insisted the AfCFTA had not been shelved indefinitely, adding: "The political commitment remains, the political will remains to integrate Africa's market and to implement the agreement as was intended."

Indeed, Mr Mene suggested the AfCFTA could eventually act as a kind of insurance policy, particularly since the African governments will not be able to kick-start their economies after the pandemic using stimulus packages like the US and Europe.

"That's our stimulus package. That's how we're going to get back on track as Africa," he commented.

There was no mention as to a new targeted implementation date and Reuters reported Mr Mene left the conference call before a question and answer session could take place.

Much still to do

It was perhaps inevitable that the AfCFTA would fall by the wayside, with talks unable to take place face-to-face as the coronavirus pandemic continues to rage across the globe and there still being much to do ahead of the implementation phase.

Before any trade could take place under AfCFTA rules, trade documents, tariff schedules, rules of origin and a system for addressing non-tariff barriers would all had to have been in place.

Countries would also have to be able to issue and process new AfCFTA customs declarations and certificates of origin, as well as universal trade documents and product-specific regulatory documents.

Without the remaining two months to ensure all this was in order and hold any necessary meetings, many essential conditions would inevitably have been left unmet.

High hopes

The trade agreement entered into force in May 2019, just 14 months after its signature in March the previous year.

Covering 55 nations and some 1.3 billion people across the African continent, it should have been the largest new trading bloc since the establishment of the World Trade Organisation in 1994.

The deal aimed to cover goods and services, as well as having complementary programmes for industrialisation, the modernisation of agriculture, small-scale trade, intellectual property, investment and more.

Predictions from the United Nations Economic Commission for Africa and TradeMark East Africa suggested East Africa would be particularly well-placed to benefit from the AfCFTA due to job creation and educational training in this area.

Banji Fehintola, senior director and head of treasury at the Africa Finance Corporation, recently told Fin24 the AfCFTA is needed now more than ever to ensure member states are continuing to trade with each other.

He explained that it would be better than any amount of policy change or tax cuts, with the elimination of tariff and non-tariff barriers through the AfCFTA's ratification vital to the development of intra-African and international trade.

Mr Fehintola also said investment in infrastructure will now be crucial to ensure trade flows seamlessly and that all African nations can truly leverage the AfCFTA.

What next?

Now, though, the continent has been forced to focus on coronavirus and little else. The African Union is trying to establish partnerships not to ensure economic growth, but simply to prepare and get through the pandemic.

Even with the relatively low infection rates being seen at present, Africa faces a challenge like never before in keeping the disease out of densely-populated urban areas and rural populations with poor sanitation.

However, the World Economic Forum has urged the global community not to give up on forging trade partnerships and pointed out that being connected to the rest of the world is key to the survival, recovery and growth of African economies through coronavirus and beyond.

Although the AfCFTA may be on ice for now, it has encouraged all nations to eschew protectionism and any unnecessary restrictions on food, medical equipment, and essential drugs.

"African countries, for their part, should remove tariffs and simplify customs clearance procedures for imports of essential drugs and equipment. By working collaboratively with existing African economic communities and political bodies, governments will ameliorate the impact of COVID-19," it concluded.

Hopefully, this should keep the spirit of the AfCFTA alive and ensure it gets back on its feet as soon as possible after this public health crisis has passed.