Private sector engagement under the African Continental Free Trade Area

1 December 2023. InfoPoint Hybrid Conference: Private sector engagement under the African Continental Free Trade Area

African countries have embarked on an ambitious process of integrating their markets beyond existing regional arrangements to create the African Continental Free Trade Area (AfCFTA). While a trade agreement, the ambitions of the AfCFTA go far beyond raising intra-African trade, to establishing regional value chains (RVCs) and promoting continent-wide industrialisation. Beyond the reduction of tariffs and non-tariff barriers, the AfCFTA’s success will therefore depend on a range of other factors, including its ability to encourage domestic and foreign investment to take advantage of expanded markets.

At the same time, the EU’s Global Gateway seeks to connect support to trade corridors with investments and access to critical raw materials. Against this backdrop, the AfCFTA Protocol on Investment represents an important step towards creating an environment conducive to investment within the African Continent. Nonetheless, such formal, legal mechanisms must be implemented and used to have an effect, raising questions for policymakers in Africa and their partners about how best to build on and support such mechanisms to promote the underlying goal of African economic transformation.

The InfoPoint addressed: (a) To what extent do harmonised legal frameworks and dispute resolution mechanisms address the key barriers to domestic and foreign investment in Africa to take advantage of a larger continental market? (b) What additional accompanying measures or support will be required to ensure the effectiveness of the Investment protocol and ensure the industrialisation and RVC ambitions can be met? (c) With the EU's Global Gateway intended to encourage public and private investments along African trade corridors, how should these initiatives be shaped to encourage investments that contribute to AfCFTA objectives of intra-African trade, investment and value-addition?

• 
  Francis Mangeni, Coordinator of Regional Advisors on the African Continental Free Trade Area, Secretariat of the AfCFTA
  Francis referred to the report
  
  UNDP (2020) The Futures Report: Making the AfCFTA Work for Women and Youth #102 p.
  
  The need for intra-African cross-border trade in food cannot be overemphasized. In the European Union, intra-EU trade of agri-food products represents 72.7 percent.  In sharp contrast, trade of food products within African countries accounts for a meagre 13 percent of total trade, dominated by small-scale maize, tea, tobacco, palm oil and sugar traders, as opposed to large-scale food conglomerates. The African countries that lead the way are South Africa, the major exporter and importer in the inter-African trade segment, followed by Egypt, Uganda, Kenya and Libya. (page 51)
  
  Cross-border trade of value-added agricultural products is even lower than that of food products in Africa despite the growing focus on value addition by small and medium-sized enterprises (SMEs) across the continent. High costs of doing business, limited access to finance and restrictive regulations continue to limit the impact that SMEs have on value addition in the sector. (page 52)
  
  
• Professor Dirk Willem te Velde, Director, International Economic Development group, Principal Research Fellow, ODI
• Suzy Nikièma, Director Investment, IISD
• Professor Felix Okatch, Chairman Emeritus, Association of Professional Societies in East Africa (APSEA)
• Moderated by Bruce Byiers, ECDPM