The trajectory of Africa’s catapult into the subsequent 50 years of the founding of its Organisation of African Unity (OAU) – the forerunner of the African Union (AU) – was laid at the organisation’s 50 anniversary in 2013, when the continent’s leaders met at their annual meeting and signed the 50th Anniversary Solemn Declaration. It was here where the African Heads of State gave rise to Agenda 2063, which sets the tone for the transformation of Africa into an economic powerhouse for the following fifty years and by that token achieve inclusive and sustainable development for its people in line with the United Nations Sustainable Development Goals (SDG’s). It is a step taken to move away from the more politically inclined objective of attainment of independence from colonial rule to one that gives prominence to socio-economic transformation. As such, the Agenda places high: improving living standards; transformed, improved sustainable economies; an integrated Africa; empowered women, youth and children; and a well governed, peaceful and cultural centric Africa in the global context. Agenda 2063 provides the guiding light on what Africa believes it needs to do to attain COVER STORY Africa Postures itself as the economic epicentre of the World. BY SILUMELUME MUBUKWANU ( Counsellor for economic affairs, embassy of the Republic of Zambia, Rome) these lofty objectives. At the centre of Agenda 2063 is 12 key flagship projects which the continent has planned to undertake in attaining those objectives. These are: construction of the Integrated High-Speed Train Network; formulation of an African Commodities Strategy; establishment of the African Continental Free Trade Area; the African Passport and Free Movement of People; silencing the guns by 2020; Implementation of the Grand INGA Dam Project; establishment of a Single African Air Transport Market; establishment of Annual African Economic Forum; establishment of the African Financial Institutions; the PanAfrican E-Network, Africa Outer Space Strategy; an African Virtual and E-University; Cyber Security and Great African Museum. Agenda 2063 also espouses the following continental frameworks: the Comprehensive African Agricultural Development Programme (CAADP), the Programme for Infrastructural Development in Africa (PIDA), the African Mining Vision (AMV), Science Technology Innovation Strategy for Africa (STISA), Boosting Intra African Trade (BIAT), Accelerated Industrial Development for Africa (AIDA).

The idea of setting up the Pan-African Free-Trade Area or Continental Free Trade Area (CFTA) was occasioned by the realisation that of itself and within itself, Africa needs to engage more in intra-African trade as a catalyst for inclusive sustainable development. The African market, which is a sizeable 1.2 billion people, provides for a huge market for anyone who cares to tap into COVER STORY the market. Currently intra-Africa trade ranks the lowest at an estimated 10% compared to its intercontinental trade markets of Europe, America and Asia at 40%, 30% and 20% respectively. Boosting of intra-African trade calls for the production of good quality products that can compete favourably with inter-continental imports.

In addition, engaging into value addition of primary goods which are usually exported from Africa at a much less profitable rate than the finished products Africa imports from the rest of the world, is an area that is hungry for investment. The foregoing therefore, provides a huge platform upon which investment into activities that add value to primary products can be engaged in. To that end, deeper international cooperation would contribute significantly to production of good quality products and enhanced technological advancement becomes key. The private sector and academia become critical to the attainment of such a state of affairs. As such, investment which directs itself to these critical aspects, is likely to benefit more in high returns in the long run as the African market begins to adopt more of its own products that would have been produced locally by good quality enterprise. Those that choose to invest on the continent, can only benefit from producing within the Free-Trade Area through the numerous incentives that come with producing within the Free-Trade Area such as those that exist under Rules of Origin. In addition to being in the Free-Trade Area, international companies that have ventured into Africa on their own or through Joint Ventures, now have a plethora of projects to participate in as the continent seeks to achieve the objectives of its Agenda 2063 flagship projects. Notable in this regard, is Chinese investment which has seen the numerous opportunities that Africa presents as the next frontier for global business. If China can make this recognition, the rest of the developed world ought to pay attention to that reality and examine the reasons why they should express concern on the by-lines, instead of taking the initiative to address the bottlenecks that stop them from participating favourably. In conclusion, it is worth reiterating that Africa has laid the requisite foundation for business to engage and flourish within that space. The future can only be brighter as the transformation of the continent takes firmer root. The political, socio-economic platform continues to improve in comparison to what things were in the first 50 years, giving rise to brighter prospects for those who wish to venture into the African environment. It is therefore advised that closer engagement with the continent, for mutually beneficial partnerships, through various avenues including its outposts in the diaspora be undertaken, particularly among the various diplomatic missions in the European sub-continent who should be on hand to provide more information.

The formation of this free trade area in Africa If ratified by all the 44 countries will become one of the world’s largest trading blocs and will create a single market of 1.2 billion people with a combined gross domestic product of more than $2 trillion. One of the key players who offered support to ensure the conceptualization of this continental agreement, United Nations Conference on Trade and Development (UNCTAD) states that cutting intra-African tariffs could bring $3.6 billion in welfare gains to the continent through a boost in production and cheaper goods. This lacked before when the continent had three separate trading bloc; Common Market for Eastern & Southern Africa (COMESA), Southern African Development Community (SADC) and, the East African Community (EAC).

However, key players and the continents largest economies, South Africa and Nigeria were missing raising concerns about the pact; the two represent $700 billion — or one-third — of the $2.1 trillion in gross domestic product across all the 55 African countries. They argued they were still conducting internal negotiations on some protocols in the pact.

This agreement is also part of the AU’s Agenda 2063, a long-term plan for continent-wide political, social and economic integration and development and critics argue the single trading bloc will not work where individual sub-regional ones have failed but will rather build on previous trade gains and will result in the whole being larger than the sum of its parts.

Key Benefits

The pact will benefit Africa in at least six mutually reinforcing ways. First, it will generate the momentum for the creation of similar arrangements for the 11 countries (including two leading economies, Nigeria and South Africa).  It is also a much larger market whose free flow of goods and services will help to maintain economic growth at over 7 percent per year. At this rate, the combined Gross Domestic Product (GDP) of Africa is projected to reach $29 trillion by 2050, which would be equal to the current combined GDP of the EU and the US. With additional policies, such growth will contribute significantly to spreading prosperity and reducing poverty.

Additionally, the treaty will serve as an impetus for investment in Africa’s cross-border infrastructure. It is estimated that Africa needs to invest nearly $100 billion annually in infrastructure over the next decade. Less than half of this target is met currently. Also, the prospects for the larger markets and supporting infrastructure will spur industrial development.

This will not only create jobs but it will also have the added advantage of diversifying Africa’s economies that are largely dependent on raw materials. The associated technological development will lead to the creation of new industries.

Also, the signal of larger markets will help to stimulate trade in services. The first beneficiary is likely to be the financial sector, which will be able to lend to larger industrialists seeking to benefit from economies of scale. Such financial services will reinforce the increase in cross-border investments by emerging African firms that are serving as regional champions of industrial development.

By being part of larger markets, small African countries will no longer be restricted to producing their traditional products. With better policies and human resources, they can become the locus of new manufacturing operations that serve wider markets and finally by providing a single economic space with harmonized trade policies and a regulatory framework, the AfCFTA solves the problem of multiple memberships, rationalizes trade negotiations, reduces the cost of doing business, supports industrialization, and stimulates cross-border infrastructure projects.