December 5, 2022

The Key to Africa’s Economic Revolution

By : BOGOLO J. KENEWENDO

The African Continental Free Trade Area Secretariat has made clear that, thanks to the AfCFTA, Africa is “open for business.” That may be true, but it will mean little unless the people running those businesses are aware of it – and reaping the benefits.

GABORONE – In the ninth century, an Ethiopian herder named Kaldi noticed something odd. Whenever his goats ate the berries of a particular tree, they seemed to get a jolt of energy. His curiosity piqued, Kaldi took some of the berries to a monastery, where the abbot took a taste and, shocked by their bitterness, tossed the berries into the fire. To both men’s surprise, however, a tantalizing aroma soon wafted in their direction. So, they removed the now-roasted berries from the fire, soaked them in water, and took the first-ever sip of coffee.

It is fitting that African countries today command a significant share of a global industry that has since become an integral part of billions of people’s lives. Cameroon, Ethiopia, Ivory Coast, Kenya, Tanzania, and Uganda all rank among the world’s top 25 coffee producers, and several other countries – including Angola, Ghana, Liberia, Burundi, Zambia, São Tomé and Príncipe, and Sierra Leone – are increasing their market share. Unfortunately, there is no guarantee that African coffee farmers will reap their fair share of benefits from these efforts.

Globally, coffee exports will be worth an estimated $155 billion by 2026, and coffee is increasingly becoming the drink of choice around Africa, thanks to the rapid growth of the continent’s middle class. But whether African farmers – of coffee and other crops – can take advantage of such opportunities depends significantly on the trajectory of the African Continental Free Trade Area.

Once fully implemented, the AfCFTA will be the world’s largest free-trade area, connecting 1.3 billion consumers across 54 countries in a single market for goods and services. The United Nations Conference on Trade and Development estimates that the AfCFTA could boost intra-African trade – which is currently low, with only 14.4% of all African exports remaining on the continent – by about 33%, and reduce the continent’s trade deficit with the rest of the world by 51%.

The problem is that few farmers know what the AfCFTA is, let alone how it can help them. According to a report by Africa No Filter, awareness of the AfCFTA among micro, small, and medium-size enterprises in Nigeria was as low as 3% in the agricultural sector in 2020. In East Africa – the continent’s biggest coffee-producing region – only 14% of the private business sector was fully aware of the AfCFTA. It is safe to assume that most African coffee farmers – roughly 80% of whom are smallholders – do not know that the AfCFTA Secretariat recently signed a memorandum of understanding with the Inter-African Coffee Organization to support the development of the continent’s coffee value chain.

This is partly a matter of media coverage. As the Africa No Filter report points out, the AfCFTA features in less than 1% of business news about the continent. Last year, when the AfCFTA Secretariat and the UN Development Programme released a Futures Report identifying value chains on which investment should focus – from the automotive sector to cocoa to lithium-ion batteries – the media barely covered it.

If a large share of consumers, entrepreneurs, and businesses are unable to keep up with developments relating to the AfCFTA or participate in discussions about how it should develop, the agreement will start to look like yet another initiative that helps only the privileged few. This could end up becoming a self-fulfilling prophecy, as insufficient information and awareness prevent the majority from taking advantage of the opportunities it creates.

Given the AfCFTA’s critical importance to Africa’s economic future, that would be a major loss. To avoid this outcome, government, with the help of media, must return to two of its most essential functions: inform and engage.

To meet the first imperative, governments should work with the AfCFTA Secretariat and other partners to revive the kinds of “awareness workshops” that were introduced when the COVID-19 pandemic began. The goal must be to reach all stakeholders, especially small and medium-size enterprises, with comprehensive information about the AfCFTA, using plain and accessible language to clarify the ways in which cross-border trade is being simplified. The Secretariat should also ensure that all relevant information is available on accessible online platforms.

The point is not to deliver abstract facts. People tend to engage with issues only when their livelihoods are affected, so it is vital to show exactly what the AfCFTA means for businesses and consumers in practice. For example, a coffee farmer in Harar, Ethiopia, must understand both that they have a potential market in Botswana, with its developing coffee culture and large middle class, and how the AfCFTA can help them access it.

Climate change poses serious risks to the AfCFTA, because most African economies’ dependence on minerals, agriculture, and wildlife leaves them vulnerable to extreme weather events. According to the UN, if global warming reaches 1-4° Celsius, the continent’s overall GDP is expected to decrease by 2.25-12.12%, with West, Central, and East Africa expected to bear the brunt of this decline.

Therefore, it is imperative to use trade as a lever for sustainable growth. Implementation of the AfCFTA must also align with Agenda 2063, the African Union’s strategic framework, which seeks inclusive growth and sustainable development for the continent, and emphasizes the importance of building “environmentally sustainable and climate-resilient economies and communities.”

To ensure that the agreement has as powerful an impact as possible, governments should implement national-level measures and strategies to complement the AfCFTA. At the same time, the AU institutions should work with organizations like the African Development Bank, the African Export-Import Bank, and the New Partnership for Africa’s Development to improve coordination on transboundary projects affecting intra-African trade, such as infrastructure investments. The AU itself should also be reformed, in line with the recommendations made in 2017 by Rwandan President Paul Kagame.

More fundamentally, African governments, societies, and institutions must embrace the principle that all Africans share a common history and a common destiny. This will go a long way toward accelerating the AfCFTA’s implementation and maximizing its benefits.

The AfCFTA Secretariat’s Secretary-General, Wamkele Mene, has made clear that, thanks to the agreement, Africa is “open for business.” That is true, but it will mean little unless the people running those businesses – from smallholder farmers to innovative entrepreneurs and from Cape Town to Cairo – are aware of it and reaping the benefits.

SOURCE : Project Syndicate

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