As African countries struggle to procure goods and supplies from global suppliers in the wake of the novel Coronavirus pandemic (COVID-19), the situation is expected to cause a shift from global supply chains towards more regionalized and localized supply chains.
That’s according to the African Continental Free Trade Area (AfCFTA) Year Zero Report, by policy and advocacy think tank, AfroChampions Initiative.
The Agreement is aimed at improving intra- African trade to among other things, create a single market, deepen the economic integration of the continent, establish a liberalized market through multiple rounds of negotiations and aid the movement of capital and people, facilitating investment.
According to the report, though the pandemic has slowed down a lot of activities across various sectors of the economy, there is a silver lining in the COVID-19 crisis for Africa and AfCFTA.
“Countries are expected to re-balance their over-reliance on distant suppliers in favour of more proximate suppliers as this could have some positive impact on ongoing efforts to boost African regional value chains,” the report stated.
Also, African countries can take advantage of the pandemic to boost African industrialization as there could be potential positive effects on regional and local manufacturing.
“Along with the potential re-balancing towards more regional value chains, COVID-19 is also expected to cause a shift from over-reliance on global manufacturing hubs towards more dispersed and diversified regional and local manufacturing,” the report noted.
COVID-19 opportunities for Africa
This is also Africa’s opportunity to accelerate e-commerce, digital economy and the Fourth Industrial Revolution, “which without a doubt will be one of COVID-19’s biggest immediate and long-term impacts.”
Making an intervention on 9th February, 2020, during the closed session of the 33rd AU Summit, in Addis Ababa, Ethiopia, Ghana’s President, Nana Akufo-Addo, assured the Assembly of Heads of State and Governments of the African Union that the AfCFTA Secretariat will be operational in Accra by 31st March, 2020.
This has been delayed due to the pandemic. Also, the AfCFTA Secretary-General has been sworn in, but is without the full complement of secretariat teams due to distractions to recruitment and staffing.
The start of trading within the AfCFTA which was slated for 1st July 2020 is also at risk.
But the report recommends that the date for the start of AfCFTA trading should not be postponed even if the pandemic continues into July.
“If AfCFTA trading can take off in the middle of this battle – even if symbolically – it will send a strong signal; it should be one of the symbolic victories for Africa in the midst of a crisis. Initial AfCFTA trade can focus on critical goods needed to fight the pandemic such as pharmaceuticals and food products. Governments should ease border crossings for these goods. The AfCFTA can be one of Africa’s main weapons to beat COVID-19,” it noted.
COVID-19 and AfCFTA’s readiness
The report also acknowledges how COVID-19 is impacting AfCFTA’s readiness.
So far, Africa has recorded 20,270 COVID-19 cases, 1,025 deaths and 4,700 recoveries as of April 18, 2020.
It stated that its preliminary assessment conducted so far show that the continent as a whole had a commitment and readiness level of below 50 percent, arguing that, Africa that is looking forward to opening its borders to a new trade revolution starting July 2020, now has almost all of its borders shut in order to fight the pandemic.
It notes that the, “fast-moving AfCFTA negotiations have slowed down as negotiating teams cannot travel and various meetings of ministers and senior officials necessary for crucial deliberations, decision-making and approvals have stalled” as a result of the negative impact of the COVID-19.”
COVID-19 firefighting means there is significantly reduced attention span for AfCFTA issues among governments, policymakers and the private sector.
Also, there is significant temporary reduction in the levels of intra-Africa trade as a result of border closures and lockdowns. As borders may take long to slowly re-open, the situation will be even more devastating for informal cross-border trade, which is the source of daily livelihoods for many in Africa, particularly for women and youth.
However, “Africa must be proactive and united in fighting the pandemic; no country should be left behind in the fight. Otherwise borders, travel and trade will continue to be disrupted even if most countries recover and a few do not,” it stated.
The African Continental Free Trade Area (AfCFTA) is a free trade area which as of 2018 includes 28 countries. It was created by the African Continental Free Trade Agreement among 54 of the 55 African Union nations.
With a combined market of over 1.2 billion people (which is expected to grow to 2.5 billion by 2050) and a GDP of $2.5 trillion, AfCFTA could potentially make Africa the largest free trade area in the world since the formation of the World Trade Organisation.