‘Trade pact can transform Africa’

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Lusaka - Trade analysts contend that the January 1, 2021 launch of the the African Continental Free Trade Area (AfCFTA) will set the continent on a development trajectory during and after the COVID-19 pandemic.

All 55 African Union member states have ratified the treaty creating AfCFTA and the bloc’s Commission has said the pact will be rolled out with concurrent ironing out of any outstanding issues.

The United Nations Conference on Trade and Development (UNCTAD) foresees public revenue losses averaging five percent this year.

This is on the back of constricted economic activity as a result of the COVID-19 pandemic as well as pre-existing trade and structural problems in the continent.

Total merchandise exports are expected to contract by about 17 percent, though these figures could start forming early next year.

“The AfCFTA can support the procurement of food from closer regional markets. All these factors could go a long way to enhance the continent’s food security and reduce vulnerability to current and emerging shocks,” UNCTAD added in a new report.

The UN agency said with at least 60 percent of Africans dependent on agriculture for livelihoods, continued trade-related distortions poses a threat to food security, hence the importance of scaling up industrialisation and manufacturing through AfCFTA.

From 2016 to 2018, the continent imported  about 85 of its food requirements, translating into a bill of US$35 billion, which could rise to US$110 billion by 2025 if unchecked.

The UNCTAD model shows that African net food exporters are at particular risk, stating that they “not only faced low export volumes due to depressed world demand, but also a productivity slump”.

Furthermore, heavy reliance on trade taxes and duties could lead to severe revenue losses.

Africa, the UN trade body said, should build productive capacity to address underlying economic vulnerabilities, and strengthen continental capabilities to better manage food, pandemic and/or health-related crises.

UNCTAD said African governments should ensure the movement of goods, including food, and essential services, adding that COVID-19 had highlighted the degree of interconnectedness between countries and the importance of building strong trade links.

To this end, the agency called for diversification in commodities traded and value addition to enhance operationalisation of AfCFTA.

 

 

 

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