Johannesburg - South Africa’s Trade, Industry and Competition Minister Ebrahim Patel has been elected chair of a continental ministerial body tasked with finalising negotiations on terms for commencement of preferential trade under the African Continent Free Trade Area (AfCFTA).
Patel undertakes the crucial role as head of the African Ministers of Trade (AMOT) three months prior to the coming into effect of the AfCFTA and with the continent grappling with the COVID-19 pandemic.
The trade ministers of Egypt, Kenya and Sierra Leone were elected AMOT vice-chairpersons, while Gabonis rapporteur.
Trading under the AfCFTA was meant to begin on July 1, 20120, but was postponed due to the new coronavirus.
The AfCFTA seeks to facilitate seamless trade between the African Union’s 55 members, who have a combined GDP of US$3,4 trillion.
After being elected to head AMOT, Minister Patel said he would prioritise finalisation of outstanding negotiations ahead of the AfCFTA’s January 1, 2021 operationalisation date.
Minister Patel said COVID-19 had dramatically altered economies and livelihoods, and two basic lessons could be drawn from this sea change.
“The first is that social solidarity is critical in fighting the pandemic and the economic reconstruction that will need to follow. At the continental level, the Chairperson of the African Union President Cyril Ramaphosa and his colleagues have been coordinating responses to the health and economic challenges arising from the pandemic. Solidarity must be at the heart of our efforts to respond to the crisis.
“The second lesson is that economic resilience is critical, we need to build up Africa’s industrial capabilities and trade and supply-chains between African countries. The recovery must focus on attracting increased investment into the productive sectors. Investment can be attracted to the continent based on the greater scale and size of markets unlocked by the AfCFTA,” he said.
Minister Patel pointed to the large levels of imports into Africa of manufactured goods as an indicator of the sheer size of the potential market for intra-Africa trade.
“Investment can be attracted to the continent based on the greater scale and size of markets unlocked by the AfCFTA,” he emphasised.
That assessment is in line with a recent World Bank report stating that AfCFTA could boost incomes by seven percent, or US$450 billion, by 2035; and help offset the negative effects of the COVID-19 pandemic, which is expected to cause up to US$79 billion in output losses in Africa this year.
He noted that AMOT agreed on a succinct set of deliverables and a focused work programme for finalisation of outstanding negotiations for adoption by Heads of State and Government at the 13th Extraordinary AU Summit on December 5, 2020.
Minister Patel said besides tariff reductions, other critical outstanding issues included strengthening of national customs administrations to monitor movement of goods and services, as well as investment in industrial capacity and infrastructure.
“Each of us needs a strong Africa, an Africa that has deeper levels of industrialisation, more jobs for young people and greater wealth-creation. That is the goal. The African Continental Free Trade Area is the means. Effective implementation is the challenge we must address,” said Minister Patel.
To date, 28 AU member states have deposited their instruments of ratification for the AfCFTA Agreement, while two other states have ratified but are yet to formally deposit instruments of ratification.
When fully implemented, the AfCFTA arrangement could potentially lift 68 million people out of moderate poverty and 30 million others out of extreme poverty.