In the alphabet soup of regional African trade blocs, will
the AfCFTA ease the cost of doing business on the continent?



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Ghana has been named the host of the African Continental
Free Trade Area (AfCFTA) following four years of talks to form a 55-nation
trade bloc. It will be the base for the AfCTA secretariat.



The opportunities for Africa with this new trade bloc are immense. The Economist Intelligence Unit estimates that the AfCFTA will create the world’s largest continental free-trade area, provided all 55 African Union (AU) members join, and has the potential to create an African single market of 1.2 billion consumers whilst eliminating about 90% of tariffs on goods over the next five years. 



So far, 44 African countries have signed up for the historic agreement, the world’s largest free trade area since the formation of the World Trade Organization.



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The AfCFTA is expected to boost the economies of African
countries through employment creation and the promotion of made-in-Africa
goods. But Kayode Akindele, a partner at TIA Capital, a pan-African investment
partnership focussed on credit-based investing across sub-Saharan Africa, is
not opening up the bubbly just yet.



“We already have ECOWAS [Economic Community of West African
States] which doesn’t seem to be working and so why don’t we sort that out
first before we enter a continental trade agreement for Africa?”



And he is not alone in his concerns. 



“There are other factors we need to also consider. Firstly, with the implementation of the AfCFTA, goods made in other continents could be disguised as made-in-Africa to qualify for duty free treatment. There could also be a reduction in government revenue and also this trade bloc also threatens the profitability and survival of infant industries,” says Vincent Acheampong, an economist based in the United Kingdom.



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Of the regional blocs in Africa, including EAC (East African
Community) and SADC (Southern African Development Community), the ECOWAS has
some way to go in terms of performance, according to Muda Yusuf, the Director
General of the Lagos Chamber of Commerce and Industry, in an interview with
CNBC Africa. But he believes there is still reason to be optimistic.



“A continental trading bloc is going to build on the success
of the regional blocs like ECOWAS and other blocs across Africa. So, this
integration is going to build on those blocs. In terms of performance, of
course ECOWAS is the least performing because East Africa is doing very well
and South Africa is doing far better also. But there is no perfect time for
things like this, what is important is for us to get a conviction that economic
integration will work for us and also if we can get our institutions to make it
work,” says Yusuf.



Amongst the many challenges of the ECOWAS is its failure to
implement its vision of a single currency, the ECO, which is part of its plans
to make Africa a more integrated continent. That vision has been postponed
several times by the 15-member group with the newest target date set for 2020
although most experts believe the date to be unrealistic.



The success of the AfCFTA requires not only a trade policy but also a manufacturing agenda, competition, industrial policies and property rights to work well according to Vera Songwe, the Executive Secretary of the UN Economic Commission for Africa, in a statement at the launch event that took place in Niamey, Niger. 



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The ninth edition of the flagship Assessing Regional
Integration in Africa report (ARIA IX) stipulates that AfCFTA’s success will be
due to its ability to actually change lives, reduce poverty and contribute to
economic development in Africa. 



In support of the new trade bloc, Ghanaian President Nana
Akufo-Addo pledged to donate $10 million to the AU to support the operationalization
of the secretariat of the AfCFTA.



Although the AfCFTA will be economically transformative for
Africa in the long-term, the immediate benefits will be restricted due to the
macro-economic uncertainties of regional trade.



“Most African countries are currently not producing the
goods and services that their neighbors import, as a result we do not trade a
lot with each other. It is easier for an African country to trade with a
country in Europe than a country that lies right next to it and these low
levels of intra-African trade need to be addressed before we can reap the full
benefits of the AfCFTA,” says Acheampong.

Africa, elements of this image furnished by NASA

Towards One Africa

Cyclone Idai, which recently devastated Mozambique, Zimbabwe and Malawi, was one of the&nbsp;worst&nbsp;natural disasters to hit the southern African region. It killed at least&nbsp;a thousand&nbsp;people and caused damages estimated at&nbsp;US$2 billion.



The response from the Southern African Development Community (SADC) member states, civil society, the private sector and individuals in the region points to the need for a collective, regional approach to addressing natural disasters – rather than individual countries working alone.



Idai also showed, once again, just how unprepared SADC is to respond to major natural disasters. It doesn’t seem to have learnt much from earlier ones.



In 2015, floods and torrential rains associated with the&nbsp;tropical storm Chedza, and&nbsp;Cyclone Bansai&nbsp;left about&nbsp;260 people dead&nbsp;and 360,000 homeless in Madagascar, Malawi, Mozambique and Zimbabwe.



About a year earlier,&nbsp;flash floods&nbsp;killed, displaced and left thousands homeless in Zimbabwe. However, the storm that remains most vivid in many people’s minds is the one that hit Mozambique 19 years ago&nbsp;in 2000, killing 700 people and leaving two million homeless.



Disasters of this kind&nbsp;know no boundaries. That’s why they require thinking beyond the narrow view that individual governments should respond to crises alone.



<h4 class="wp-block-heading">Responses to Idai</h4>



The first regional response to Idai came from the&nbsp;South African National Defence Force&nbsp;and South African disaster relief NGO,&nbsp;Gift of the Givers. These responses followed a&nbsp;request&nbsp;by the Mozambican government.



The United Nations responded with&nbsp;aid operations&nbsp;in the affected countries a few days later.&nbsp;Other SADC countries, NGOs, the&nbsp;private sector&nbsp;and&nbsp;ordinary citizens&nbsp;also&nbsp;donated&nbsp;to the relief efforts.



For its part, however, SADC’s voice was conspicuously absent for at least a week after the devastation. Ordinarily, it should have led relief operations.



It was disconcerting to see UN Secretary General António Guterres appeal for help and outline a plan to respond to the disaster at a&nbsp;Security Council stakeout, while SADC remained missing in action.



SADC has a dedicated&nbsp;Disaster Risk Reduction Unit. It coordinates regional preparedness and responses to trans-boundary disasters and hazards. But, as South Africa’s Foreign Affairs Minister Lindiwe Sisulu said, the regional body was&nbsp;completely unprepared&nbsp;for the disaster.



<h4 class="wp-block-heading">Pooling resources</h4>



Of SADC’s 16-member states only Angola, Botswana, Tanzania, Zambia and South Africa contributed to the relief efforts. This reflects the prevailing preference for a&nbsp;bilateral approach&nbsp;to regional challenges within the SADC.



At the heart of this are narrow nationalistic interests and a preoccupation with sovereignty. The member states are unwilling to surrender control over policies to be administered by the regional body for the collective good.



But, natural disasters like Idai doesn’t respect national boundaries. Their very regional scope requires solutions that integrate domestic actions into a regional governance framework to address them effectively.



When SADC eventually responded, it&nbsp;pledged US$500,000&nbsp;for relief efforts towards a disaster that cost over&nbsp;US$2 billion&nbsp;in damages to infrastructure alone.



Instead of acting individually, SADC countries need to work together to pool resources and mobilise disaster relief efforts and resources to be more effective. This could be done through the SADC Secretariat.



Funds for immediate humanitarian assistance and the rebuilding of infrastructure should be held in a preexisting, dedicated facility, like a regional disaster risk fund.



This would provide southern Africa with risk financing for climate-related and other disasters. Funds that are often donated by SADC member states, private sector, NGOs, and ordinary citizens for relief efforts can also be pooled and placed in the permanent regional mechanism.



But, there are challenges.



The major challenge to establishing a sub-regional disaster fund probably lies outside SADC, and even Africa. The idea might not sit well with some governments. For example, an attempt to create an Asian Monetary Fund after the 1997/98 Asian financial crisis failed because the US&nbsp;strongly opposed&nbsp;it, and China didn’t support it.



But, SADC could work with global financial institutions to surmount this challenge. The World Bank, for example, already runs&nbsp;disaster risk programmes. SADC could approach it for support and partnership in making the facility a reality.



<h4 class="wp-block-heading">Cushion against harm</h4>



Cyclone Idai has once again shown that natural disasters are capable of wreaking havoc across southern Africa. It’s also shown that affected countries are too poor to respond to the devastation of their infrastructure and the accompanying humanitarian disaster.



It is thus necessary for countries in the region to work together to devise sound contingency plans, including a permanent regional disaster fund, to help cushion them against the effects of natural disasters.



-Chris Changwe Nshimbi; Director &amp; Research Fellow, University of Pretoria



-The Conversation



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Tag: Southern African Development Community

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Towards One Africa

Southern African Countries Won’t Manage Disasters Unless They Work Together