While coronavirus pandemic (COVID-19) presents significant challenges to people and organisations around the globe and the disruption continues to evolve, it has also presented a big challenge for the smooth take-off and implementation of the African Continental Free Trade Area Agreement (AfCFTA).
The long-awaited AfCFTA, which is supposed to take off on July 1, 2020 is likely not going to happen because of the devastating impact of coronavirus pandemic on lives, governments and businesses across Africa, making many nations fearing for possible recession.
According to COVID-19 and the African Continental Free Trade Area Agreement, the latest publication by PricewaterhouseCoopers (PwC), AfCFTA, which is expected to enhance intra-Africa trade, is being hampered by challenges such as border closure, travel bans, nationalism and uncertainty in tariffs and exchange rates.
As well, PwC’s latest publication noted that with the rescheduling of the take-off to January 2021, it has also delayed the implementation and benefits expected in the first year of implementation across the continent, especially the integration, diversification and industrialisation of African economies of about 1.3 billion people with a combined gross domestic product (GDP) of USD 3.4 trillion.
Looking at the above benefits, which are core objectives of AfCFTA, PwC regretted that they may not be realised for now as COVID-19 seems to undermine the possibilities through the crippling effects that is causing a global economic crisis, as well as, in Africa.
PwC’s latest publication also noted that travel restrictions are having direct impact on the economic integration and intra Africa trade, hence it called on governments within Africa to prepare for the possible negative impact the virus will have on the implementation of the agreement of and seek out ways to convert the pandemic to opportunities for stronger economic and political integration.
Reviewing some of the negative impacts of the pandemic on Africa, the latest publication disclosed that border closure by some countries has impacted on trade within the continent, weakened export, caused scarcity, price hike among others.
As well, the publication revealed that trade liberalisation is hampered in the face of Covid-19 as all negotiations on tariff concessions are currently at a halt due to the pandemic and countries are more focused on saving lives and preserving livelihoods.
Proffering solution, PwC suggested that going into the AfCFTA post COVID-19, Nigeria and other African countries should build digital economy to foster production of higher quality goods and services at reduced costs.
According to PwC, the initiative will open new channels for value addition and broader structural change. “To sustain this process in the continent, there is a need to develop and/or upgrade the digital infrastructure, digital financial services, digital entrepreneurship and digital skills that are thematic pillars of the Digital Economy for Africa (DE4A)15 to encourage trading digitally across individuals, SMEs and Governments. Countries that can get this development requirement could compete effectively within the CFTA”, the publication further revealed.
It also noted that going into the AfCFTA post COVID-19, countries like Nigeria need to consider fiscal sustainability in terms of focusing efforts in key areas where the country has biggest impact such as rails, ports in order to optimize the country’s resources.
“Each government needs to review its Information Technology plan in line with economic digitalisation before trading in the CFTA begins in 2021 as it is now clear that globalisation has gone online”, PwC highlighted.
While African bemoan the pandemic, PwC noted that the situation can turn into a “blessing in disguise” if proper strategies and policies are put in place by the various countries.