Why Africa can’t afford further delay on AfCFTA — AFREXIMBANK

The devastating impact of the coronavirus pandemic on Africa’s economy has shown that the continent can ill-afford a further delay in the implementation of the African Continental Free Trade Agreement (AfCFTA), panelists in a web conference on Africa’s economic recovery, post-COVID-19, said on Monday.

The panelists consisted of the Senegalese President, Macky Sall, and his Liberian counterpart, George Weah; President, AFREXIMBANK, Benedict Oramah; U.S. Senator and member, Senate Foreign Relations Committee on Africa, Chris Coons; President, International Committee of the Red Cross, Peter Maurer, and President, Africa CEO Forum, Amir Yahmed.

The high-level panel conference moderated by Group Chairman, UBA, Tony Elumelu, was on the theme: “UBA Africa Day Conversations 2020: Growth, Jobs, and Sustainable Development Amidst a Global Pandemic.”

In his presentation, Mr Oramah said despite not having too much health problems or deaths as a result of the pandemic, Africa has become the epicentre of the economic devastation COVID-19 has unleashed upon the global economy.

He blamed the situation on excessive dependence on commodity export without any effort to build infrastructure to promote intra-regional integration and trade as well as avoid bailouts from outsiders.

“The COVID-19 crisis is a reminder to all Africans about the collective need for togetherness and reaffirmation of our faith in ourselves and Africa.

“With the COVID-19 crisis, Africa must see the positive message that there comes a time when every groups of people should begin to fend for themselves and be independent and integrate the continent better in terms of trade and investment among ourselves as well as promote growth and development as a people, without always looking out for bailouts from outsiders,” he said.

‘ACFTA as the way’

Mr Oramah said the COVID-19 pandemic has exposed so many weaknesses across Africa, ranging from lack of basic infrastructure to appropriate economic policies to help drive growth and manage the crisis of current magnitude.

With COVID-19, he said most governments in Africa were ill-prepared, either with the resources, “or the soft and hard infrastructure necessary to deal with crisis.”

The priority before the 55 governments in Africa, he said, must be to ensure the AfCFTA, reached almost two year ago by the African Union Heads of Government to facilitate intra-regional integration and trade, was implemented without further delay.

“If there was any doubt about the importance of the agreement reached about two years ago, the COVID-19 pandemic has showed this is the way to go. We have to put away all reservations we have and build supply chains across Africa.

“This is the only way we can begin to foster dynamic growth in the African continent. If we do not do that, we will remain perpetual commodity exporters. And we have seen what commodity exporters suffer in times of global crisis like this.

“Not only did crude oil prices crash, but there was also no market for it, as nobody was ready to buy them. At the same time, companies and individuals looking for medical or pharmaceutical supplies, Africa did not have the infrastructure or the capacity to produce them.

“Africa was waiting to be supplied from outside. But, the supply chains were all disrupted by the crisis. So, AfCFTA is the answer. We must waste no time. Africa must use this opportunity to overcome all the challenges we may have at country levels and collectively as a continent,’ he said.

With the implementation of the ACFTA, Mr Oramah said Africa “can begin to gradually build the health infrastructure, build the manufacturing base and the physical infrastructure to connect the continent, so that when the continent is confronted with crisis like this, we will be able to handle them.”

“Unless Africa creates the market and ensure all the things necessary to build bigger banks capable of financing the development and growth the continent needs,” he said, “Africa would remain vulnerable to this kind of crisis in future.”

Hunger worse than coronavirus

Mr Orama said Africa’s debt has grown from about $200 billion in 2006 to about $1trilion today.

He said the continent’s continued dependence on commodity import/trade could be blamed for this adding that the continent would continue to experience fiscal problems as prices of commodities crash.

“To get around it, Africa must find a way to no longer depend solely on commodities. We have to build a dynamic economy that is less dependent on commodities, but on the kinds of goods and services not vulnerable to episodic shocks experience in Africa.

“We should build a domestic capital market that will bring the fragment stock exchanges in Africa together to build a strong financial system and diversified sources of funding growth and development and depend less on borrowing internationally,” he said.

Besides, he said although COVID-19 is posing a health challenge, “in Africa the crisis is deeper in many other areas, including food supply and agriculture.”

He said “massive hunger is looming if nothing is done before the end of the pandemic,” adding that “if governments in Africa allow hunger to take over from COVID-19, the continent would likely see political problems, since hungry people would start agitating.”

“Hunger virus will be more devastating that coronavirus, because if people do not have what to eat, they are likely to begin to go to the streets in protest. If that comes after the COVID 19 pandemic, it will take a very long time for Africa to come out of the crisis,” he warned.

Government-private sector collaboration

The Liberian President, George Weah, spoke of how his government was working to support private sector overcome the crisis in his country.

He said since the COVID-19 pandemic erupted, his government has been relating with commercial banks, businesses and other partners to manage the loan repayment schedules as well as provide other stimulus packages to alleviate some of the financial and social burdens on its citizens.

‘U.S. must do more to support Africa’

Meanwhile, the Member of the U.S. Senate Committee on Foreign Relations on Africa, Chris Coons, expressed confidence in the swift manner African leaders have responded to the COVID-19 crisis.

The lawmaker said he would continue to support a strong and significant investment in the African economy to unlock its potentials and to provide for more robust growth and sustainable partnership.

He said the U.S. should do more to support Africa, pointing out that to recover from the impact of the pandemic, “Africa must partner to develop a vaccine to be made widely available, free, affordable and easily distributable to the people”.

Mr Coons, who said he championed the extension of the African Growth Opportunity Act (AGOA) introduced by the Obama government.

The Act was to give Africa the opportunity to trade with the U.S. without the trade barriers in other places. He said he was encouraged by the progress made so far on the AfCFTA.

He said he was also part of new Development Finance Corporation created to help provide about $60 billion investment funding in partnership with the African private sector and government to address growth opportunities.

Expressing concern over the Trump administration’s relationship with multilateral organizations, like the World Health Organisation (WHO), he said despite the issues, “this was not time to look backwards, but to pull together and build collective effort and move forward as partners.”

Checking extreme poverty

On developing opportunities for more global support against COVID-19, Mr Maurer said the current crisis has provided an excellent opportunity to address the high incidence of extreme poverty in Africa, which has constrained investment.

He said the health system in Africa was currently very uneven and would be difficult for the government to fund alone from public purse.

“We need to look into micro-health schemes that allow insurance sector to work with the government to expand coverage for people. Also, we need to look at the education sector and training of the youth in entrepreneurial skills development to create job opportunities,” he said