Private Sector’s transformative role in AfCFTA highlighted at COM2022

Dakar, 15 May 2022 (ECA): The private sector is the major engine for the successful implementation of the African Continental Free Trade Area (AfCFTA), as it has the potential to transform African economies and position the continent as an increasingly dynamic force in the international arena, according to the panellists at the launch of ECA's two knowledge products side event at the 54^th session of the Economic Commission for African Ministers of Finance, Planning and Economic Development in Dakar, Senegal.

This was the overarching message from the launch of two complementary knowledge products of the Economic Commission for Africa (ECA), one emerging from a study on the implications of the AfCFTA for demand for transport infrastructure and services and the second, which unveils key findings from the AfCFTA Country Business Index (ACBI) Report 2022, the first report in a series of publications that aim to measure the ease of doing business within Africa, , organized by ECA and the UN Global Compact, with the support of the European Union.

In her opening remarks, Ms. Vera Songwe, UN Under-Secretary-General and Executive Secretary of the ECA said the AfCFTA Country Business Index (ACBI) report sheds light on what works and what did not work in the AfCFTA and provides useful information on trade challenges faced by women traders and small businesses.

"Considering that women make up 60-70% of small-scale cross border trading, accounting for much of the income of small communities along trading routes the ACBI evaluates how well the system is working for women and SMEs doing cross-border trading," the Executive Secretary noted.

This, according to Ms. Songwe, will ensure that countries in Africa can seamlessly trade with each other without the constraint of complex and often expensive customs procedures and tariffs," the Executive Secretary noted.

Ms. Songwe also spoke about the establishment of the essential infrastructure facilitated by the Afreximbank and emphasized that all African countries should strengthen their trade cooperation and the harmonization of African financial systems.

Ms. Songwe added that ultimately, when the ACBI is conducted across the whole continent, "it will enable us to have a more comprehensive view of the bottlenecks in African trade regimes. It is important to assess, understand and monitor the private sector perception of the AfCFTA in order to ensure a sustainable and inclusive implementation of the AfCFTA."

In conclusion, Ms. Songwe stated that the ECA was grateful for the European Union's continuing support to the ECA, particularly its work in the implementation of the AfCFTA agenda.

On her part, Ms. Birgitte Markussen, EU's ambassador to the African Union (AU) said that the EU is delighted about the continuous momentum in getting the AfCFTA off the ground, as it is a real and effective game changer that will further help Africa's transformation.

"Trade and regional integration are strategic and traditional areas of mutual interest for EU-AU cooperation and key priorities of the new EU-AU Partnership. It is obvious that the benefits of the AfCFTA will only be realized with active participation of the private sector," the Ambassador highlighted.

She added that the Global Gateway Africa-Europe has been created to increase regional integration, building on AfCFTA, RECs and regional value chains; to establish trade corridors; to support women and youth led businesses; and support green transition with raw materials.

In the same veins, Ms. Sanda Ojiambo, Assistant Secretary-General, and CEO of the UN Global Compact (UNGC), said that the UNGC aims to help African businesses grow sustainably and the partnership with ECA on the AfCFTA Country business Index is key in this endeavour.

To this end, UNGC has developed a new Africa Strategy to drive impact on the continent, placing greater emphasis on African priorities and people.

"The private sector plays a critical role in the development of Africa, and hence our new strategy for Africa will ensure businesses across the continent have access to the tools and partnerships they need to play their part in creating a resilient future while adhering to responsible and sustainable business practices," she added.

Alluding to the research findings of the AfCFTA Country Business Index (ACBI) from the seven countries namely Angola, Côte d'Ivoire, Gabon, Kenya, Namibia, Nigeria, and South Africa, the Director of the Regional Integration and Trade Division of the ECA, Mr. Stephen Karingi stated that UN development agencies, African governments and Business associations and key partners should reinforce their collaboration to address the challenges faced by women-owned and small and medium sized businesses in trading across borders.

"The ACBI results indicate that trading across borders is more challenging for female-owned firms compared to male-owned firms." Mr. Karingi outlined.

He added that small firms find custom duties as the most important barrier to trading goods relatively to larger firms.

On his part, Mr. Robert Lisinge, Chief of the Energy, Infrastructure and Services Section of the Private Sector Development and Finance Division of ECA, presented the estimates on, 'Implications of the AfCFTA for demand for transport, infrastructure and services', which indicate that with AfCFTA in absolute terms, over 25 per cent of intra-African trade gains in services would go to transport alone; and nearly 40 per cent of the increase in Africa's services production would be in transport.

"According to the research findings, AfCFTA requires 1,844,000 trucks for bulk cargo and 248,000 trucks for container cargo by 2030. This increased to 1,945,000 and 268,000 trucks respectively if planned infrastructure projects are also implemented," he noted.

Mr. Lisinge concluded by calling on the private sector to look for huge AfCFTA investment opportunities in transport infrastructure and services.

The speakers were joined on the panel by Mr. Prudence Sebahizi, Chief Technical Advisor at the AfCFTA Secretariat, Dr. Amany Asfour, President of the Africa Business Council, Mr. Silvester Kasuku, CEO African Center for Transport, Infrastructure and Regional Integration and Professor Adji Bousso Dieng, from Princeton University who all spoke of the developmental potential of the AfCFTA and the critical leadership of the African Private Sector to ensure the AfCFTA can deliver on its economic and social development gains.

The annual Conference of African Ministers of Finance, Planning and Economic Development, which is being held in Dakar, Senegal from 11 to 17 May 2022, runs on the theme "Financing Africa's Recovery: Breaking New Ground."

For more information Contact
Communications Section
Economic Commission for Africa
PO Box 3001
Addis Ababa
Ethiopia
Tel: +251 11 551 5826
E-mail: [email protected] or [email protected]

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