The fast-tracking of the African Continental Free Trade Area (AFCFTA) could significantly offset the slowdown in Africa’s world trade as a result of Covid19. The virus disrupting global supply chains has the potential to cause particularly devastating effects for African countries as many of the 53 states rely on income from high trade tariffs from the approximate annual US$760 billion generated (total Africa trade figure 2017) as a significant contribution to national revenue.
“The potentially significant stimulus of the successful implementation of AFCFTA for 1.2 billion Africans is an increase of more than 50% in intra-African trade according to the IMF,” says Jacob van Rensburg, Executive Co-ordinator of the World Customs Organisation Regional Private Sector Group of East and Southern Africa (RPSG-ESA).
Van Rensburg who is doing his PhD on customs links in Africa is the author of a White Paper on the readiness of African Customs Administrations in the implementation of the agreement. “The Agreement is presently facing headwinds but could regain momentum with political will and the incentive of recouping losses incurred in the light of present circumstances.
“The African Continental Free Trade Area (AfCFTA) was launched last year to reduce trade barriers across Africa and according to the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) 39 out of 53 African countries have ratified the WTO TFA, with an average implementation commitment rate of 35%.
He points to the World Bank’s (WB) Ease of Doing Business – Trading Across Border, as well as the World Economic Forum’s (WEF) Global Competitiveness Index (GCI) surveys points to time and cost to import and export where many African countries score in lower reaches in global terms.
“The surveys indicate that the majority of African countries are not ready to implement the AfCFTA lacking technological and infrastructure readiness, process sophistication, and political will. Countries fear the loss of revenue under the AfCFTA as their economies still depend on high tariffs as a significant contribution to national revenue. However, trade facilitation will lower costs and result in higher volumes which in turn address loss of revenue incurred through reduction in tariffs.
“The World Bank showcases the importance of undertaking Customs reforms and trade facilitation indicating that of the 33 economies that undertook reforms in 2017/18, 25 improved their existing electronic systems for exports or imports and substantially reducing the time of documentary and border compliance. Electronic systems for filing, transferring, processing and exchanging information have become important tools for managing flows of information in complex trading environments,” Van Rensburg says.
“The four-point plan for ensuring AFCFTA regains momentum requires Customs-to-Customs (C-2-C) collaboration across the region; Customs-to-Business (C-2-B) collaboration and uptake of Authorized Economic Operators (AEO); Alignment in Trade Single Windows and IT-Connectivity and; Implementation of WCO Instruments and Tools.
“This plan has received a boost with the establishment of the website wcoesarpsg.org to facilitate trade in the import/export field using an approach encouraging businesses to become Authorised Economic Operators (AEOs). It presently focusses on the countries in the East and South African region. In addition there is an officially binding agreement, as a legal platform to solve many cross border trade issues impeding trade in Africa, particularly on goods in transit and mutual recognition.”
Van Rensburg says that ultimately the success of the AfCFTA will rely on people with Africa’s political leaders rallying behind the Agreement. The present offers the opportunity to Customs Authorities to introduce trade facilitation tools and structures while the daily pressures are reduced at congested points and throughout the supply chain. It also offers the opportunity for the people of Africa to unite and put aside politics and ideologies that have fragmented regional interests.
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