The Secretariat which is responsible for coordinating the implementation of the ECOWAS Brown Card Insurance Scheme says it is engaging with key stakeholders across the continent, to ensure that the insurance scheme remains robust even as the African Continental Free Trade Agreement (AfCFTA) comes into force this month.
The African Continental Free Trade Agreement (AfCFTA), signed by 44 African countries, is meant to create a tariff-free continent that can grow local businesses, boost intra-Africa trade, boost industrialization and create jobs.
The Agreement, which is expected to see full implementation this month, initially requires members to remove tariffs from 90% of goods, allowing free access to commodities, goods, and services across the continent.
The United Nations Economic Commission for Africa estimates that the agreement will boost intra-African trade by 52 percent by 2022. The agreement, signed by all but three of Africa’s fifty-five nations, establishes the largest free trade area in the world since the creation of the World Trade Organization in 1995. Once the remaining countries join, AfCFTA will cover more than 1.2 billion people and over $3 trillion in GDP.
The implementation of the AfCFTA is expected to impact a number of things including the ECOWAS Brown Card Insurance Scheme. The Brown Card Scheme functions through a network of 14 (fourteen) National Bureaux disseminated in each ECOWAS Member state with the exception of Cape Verde.
The main objective of the scheme is to guarantee to the victims of road accidents a prompt and fair compensation of damages caused by non-resident motorist from ECOWAS member states visiting their territory.
Speaking to Citi Business News on the impact of the implementation of the AfCFTA, the Secretary General of the Council of Bureaux of the ECOWAS Brown Card Insurance Scheme, Winfred Dodzih, said a lack of preparation can negatively impact the ECOWAS Brown Card Insurance Scheme.
“The AfCFTA will really impact on the ECOWAS Brown Card because as you rightly said there will be a lot of free movement, not only within the regional block but outside the region as well. So the permanent secretariat has been negotiating the relevant stakeholders such as the CEMAC and Yellow Card, to see how we can come together to leverage this new agreement.”
The African Union launched AfCFTA negotiations back in 2015 with the hopes of boosting intra-African trade, which falls behind trade within other regional blocs. Only 15 percent of African exports go to other African countries, compared to intra-trade levels of 58 percent in Asia and 67 percent in Europe.
High tariffs and colonial-era infrastructure make it easier for African countries to export to Europe or the United States than to each other.
Furthermore, overlapping membership in Africa’s eight Regional Economic Communities (RECs) hinders trade standardization and enforcement. AfCFTA, which establishes a single continental market for goods and services, seeks to increase intra-African trade by cutting tariffs by 90 percent and harmonizing trading rules at a regional and continental level. If successful, AfCFTA is expected to boost intra-African trade by 52.3 percent by 2022.
The agreement comes at a critical moment for Africa. For centuries Europe, the United States, and more recently China have stripped the continent of its raw materials.
Today, more than 75 percent of Africa’s external exports are extractives, namely oil and minerals. Increasingly, African nations hoping to secure sustainable economic growth are shifting away from the volatility associated with extractive exports towards industrialized goods. While overall intra-African trade is minuscule, 42 percent of it consists of industrial goods and this number is expected to grow under AfCFTA.