The African Continental Free Trade Area (AfCFTA) which was established in 2018 to create a single market for goods and services, was set up to promote and expand economic activities by facilitating trade through free movement of people.
In March, TEF hosted the Secretary General of the African Continental Free Trade Area (AFCTA), Wamkele Mene, to identify new opportunities presented by the recently-commenced AfCFTA for us to jointly strengthen, scale and support small and medium scale enterprises across all 54 African countries.
SMEs contribute over 70% of Africa’s GDP and create over 400m jobs on the continent! Simply put, economies are powered by SMEs. This is why at #TEF we are empowering the next generation of African entrepreneurs through our US$100m TEF Entrepreneurship Programme.
If empowered adequately, our young entrepreneurs and their SMEs will help to address our continent’s limited industrial and production capacity, support in diversifying our economies and improve intra-African trade and ties via enhanced regional competitiveness.
We commend the #AfCTA for championing the free movement of goods, services, people and payment to ensure that Africa has more prosperous economies. Simultaneously, it creates the policy space, support and structure for industrial development. We look forward to creating new opportunities for African SMEs, and advancing African interests at home and abroad!
Collectively, we must leverage the #AfCTA as a tool for economic development and an industrial driver. With financial support, trade finance, and the removal of restrictions, we will grow our continent’s industrial capacity, deepen our production capacity, innovate our existing economic models, diversify our economies and national incomes, and invest in pervading transport and infrastructure deficiencies.
However, new challenges have risen from the disruptions caused by the COVID-19 pandemic. Most African countries face restricted travels and depreciating currencies and remittances, inevitably slowing economic integration and the implementation of the agreement.
In a new report titled: “COVID-19 and the African Continental Free Trade Area Agreement” published by TEF research partner, PriceWaterCoopers in February, African nations and relevant stakeholders could turn the agreement into an opportunity for stronger collaboration if certain policies are pursued quickly.
The emphasis is on seeking out ways to convert the effects of the pandemic into opportunities for stronger economic and political integration, and enabling infrastructure such as electricity, roads and affordable internet services can fast-track a continent that is self-reliant. However, African governments are not the only ones being called upon to do more.
Former CEO of the Tony Elumelu Foundation, Parminder Vir, wrote earlier in the month on the need for African SMEs to organise and educate themselves about the AfCFTA, and to be participants and not bystanders in this new African initiative.
“African entrepreneurs must raise awareness and initiate campaigns on how they can benefit from the agreement, and what measures and policies are needed to ensure they have a place within the agreement. SMEs must also provide their own leadership, as they cannot afford to wait for others to lead them. With their chosen leaders and with a common voice, they can then begin to engage with the AU, African governments and trade bodies, holding them accountable for the implementation and regulation of the AfCFTA to ensure that it works as intended for all Africans.”
The AfCFTA has the potential to increase intra-African trade by over 50%, according to the UN Economic Commission for Africa, and there is no doubt that African SMEs will benefit from greater access to new markets.