African Continental Free Trade Area Secretariat to commence in January 2021
The AfCFTA Secretariat has rescheduled the implementation of the pan-African free trade agreement to January 2021 due to the COVID-19 pandemic (Pulse, 6 July). The Secretary-General of AfCFTA, Wamkele Mene, said Member States must complete negotiations on trade tariffs and other protocols under the AfCFTA within the next six months. The Secretariat indicated that the AfCFTA can be implemented only after the next scheduled Summit – an Ordinary Session of the Assembly of Heads of States – which falls on 2nd January 2021. The continental free-trade area would be the world’s largest economic free trade zone, judged by spatial size and population. It is expected to increase intra-African trade from the current 12% of total trade by African countries, to 52% by 2023. But trade experts have said that the pandemic could make the 52% target unachievable within the set period.
World Bank: AfCFTA assets for Africa
Stimulating growth, raising incomes and wages, reducing poverty, deepening inclusion, developing value chains, etc. the benefits of the implementation of the African Continental Free Trade Area (AfCFTA), whose effective start was postponed in January 2021 following the COVID-19 pandemic, are palpable for the World Bank (Commodafrica, 28 July).
In a new report – The African Continental Free Trade Area: Economic and Distribution Effects – the World Bank estimates that the AfCFTA will be able to increase regional income by 7%, or $450 billion, by 2035. This increase in income will be generated mainly by the removal of non-tariff barriers such as quotas and rules of origin ($153 billion) and above all by trade facilitation measures such as the reduction of administrative formalities or the simplification of customs procedures ($292 billion).
The AfCFTA will significantly boost African trade, especially intra-regional trade in the manufacturing sector, the World Bank says. However, inter-African trade will only be 21% in 2035 compared to 15% estimated without the implementation of the agreement.
The volume of total exports would increase by almost 29% by 2035 with intra-continental exports rising by more than 81%, while those to non-African countries would only increase by 19%. The AfCFTA would favour manufacturing industry; lower gains would be observed in agriculture with a 49% increase in intra-African trade and a 10% increase in extra-African trade. Gains in trade in services would be modest with about 4% overall and 14% in Africa.
The AfCFTA would also boost regional production and productivity and lead to a reallocation of resources between sectors and countries. By 2035, agricultural production would decline by $8 billion compared to the reference scenario. However, these figures need to be qualified: the decline is mainly attributable to North Africa, with manufacturing and services (commercial, transport, leisure) benefiting from the AfCFTA. In the other regions, agriculture is growing rapidly. On the other hand, the aggregate figures mask a great heterogeneity of results between countries: out of the 24 economies represented in the simulations, the relative importance of agriculture increases in 14 countries.
SADC strengthens mechanisms on food security in response to COVID-19
The Southern African Development Community (SADC) region is strengthening mechanisms for food security as the coronavirus continues to spread (Namibia Economist, 7 July). The Ministers responsible for agriculture, food security, fisheries and aquaculture have reviewed the guidelines developed by the SADC Secretariat in response to the COVID-19 pandemic. Soon to be presented to the Council of Ministers, the guidelines provide SADC Member States with measures to avoid disruption to food supply chains and associated livelihoods resulting from the impact of COVID-19. The guidelines provide measures to minimize disruption to farming operations, and enable access to production inputs, including critical emergency veterinary drugs. The measures also include ways to reach markets for farming households. The move by SADC to set up guidelines on food security is supported by the UN Food and Agriculture Organization, which has proposed strategies to reduce food loss and manage harvest gluts in traditional local supply chains.
As part of the guidelines, Member States have agreed to establish national transport and trade facilitation committees or use existing structures comprising officials from the ministries responsible for transport, health, police/army, and trade to coordinate the implementation of the guidelines, and resolve operational issues at borders or road blocks. To assist and coordinate Member States and corridor groups in implementing the transport guidelines, a Regional COVID-19 Trade and Transport Facilitation Cell has been created at the SADC Secretariat. This move is critical in supporting the transportation of food items across the region.
RUFORUM: “Delivering food for Africa”
The Regional Universities Forum for Capacity Building in Agriculture (RUFORUM) held a webinar on 15 July focusing on “Delivering food for Africa in a transforming agri-food system in the ‘new normal’”. Makerere University has published a synthesis report of the points of action and emerging issues. It concludes that there is a need to continue advocating for increased investments in agri-food systems in the continent. Universities and other higher education institutions can contribute to delivering food for Africa in a transforming agri-food systemsin the ‘new normal’ by developing and delivering demand-driven curriculum, and appropriately training human resources with requisite skills for innovation and technology development, and agricultural extension and advisory services.
IDA: 30 million to Sierra Leone to boost smallholder agricultural productivity
The International Development Association (IDA) of the World Bank has approved a $30 million grant to support Sierra Leone’s agricultural productivity and market access for its smallholder farmers and agribusinesses (Commodafrica, 24 July), to help the sector recover from the COVID-19 pandemic. This additional funding for the Smallholder Commercialization and Agribusiness Development Project (SCADeP) is expected to promote investments in roads and bridge construction, and facilitate access to the most remote localities with high agricultural production. It will also increase the supply of improved seeds and fertilisers.
AfDB: R5 billion crisis response budget support for South Africa
The African Development Bank has approved a loan of approximately R5 billion ($288 million) to the government of South Africa (AfDB News, 22 July). South Africa is currently the African country most affected by COVID-19, and among the top five in the world in terms of confirmed cases. The loan will finance South Africa’s COVID-19 Response Support Program, and represents the Bank’s first ever budget support to the country. The operation is designed as a Crisis Response Budget Support Operation prepared following a request from the national government. South Africa’s ability to respond to the pandemic has implications for neighbouring countries as well as the continent as a whole, given its position as Africa’s second-largest economy after Nigeria.