Can Africa Surprise the World by Delivering the Continental Free Trade Area (CFTA) by the end of 2017 - Economic Research Forum (ERF)

Can Africa Surprise the World by Delivering the Continental Free Trade Area (CFTA) by the end of 2017

Can Africa Surprise the World by Delivering the Continental Free Trade Area (CFTA) by the end of 2017

By Abdalla Hamdok, Executive Secretary a.i. UNECA
 
During the 50th Anniversary of both the OAU/AU the vision of the African continent for the next 50 years was adopted. Such vision foresees a prosperous and united continent that is effectively integrated and has a strong link to the global economic system, in which poverty becomes a thing of the past, and the living conditions of the peoples are characterized by sustained improvement. Structural and economic transformation of Africa is critical for the realization of this vision. In today’s globalized economy in which trade has become an important engine of sustainable economic growth and development, the role which trade, can play in Africa’s transformation and renaissance cannot be overemphasized.
 
After the lost decades of the 1980s and 1990s in Africa, the economic and political performance of the continent in the first decade and a half of the new century had a positive outcome. That is why this period has been rightly termed as a decade of “Africa’s economic and political renewal”. The dynamism and good performance of Africa’s economy over the last decade and a half have been reflected in its resurgence and its relatively strong recovery from the recent global economic and financial crisis. While Africa’s impressive economic growth performance over the last decade is heartening and should be a source of pride to all of us, it is important to put it in proper perspective, especially in the context of the vision for the continent’s transformation and renaissance. The economic growth achieved in recent years has not produced enough jobs that are commensurate to our region’s demographic growth. In addition, the jobs that the growth has generated have also been precarious, meaning that the employment situation in Africa has not improved. Given the current demographic trend, the prevailing pattern of economic growth in Africa, is not conducive for social stability, peace and security; and therefore not sustainable in the long run.
 
Africa’s economic data also shows that on the poverty reduction front, the absolute number of those living in poverty remains a major policy and development concern. Our work at the ECA continues to show that the failure of Africa’s economic growth to have a deep impact on the social conditions can be attributed largely to the nature of the driving force of the growth: especially the production and trade patterns. For example, Africa continues to be a major source of agricultural and mineral resources which have been powering economic growth and development in other regions. The exports from Africa of raw materials with little or no value addition, have limited their contributions to job creation and improvement in the living conditions of the people.
 
As the experience of other developing regions of the world has shown, trade can serve as a powerful engine for job creation, inclusive growth, poverty reduction, and sustainable development. But it is the participation in the dynamic sectors of global trade—manufactures and services—that has the potentials of delivering these results and not the trade in primary commodities that are characterized by inelastic demand and instability of prices. Evidence suggests that realisation of the regional integration aspirations in Africa can address the challenges that our continent has in the area of trade. Indeed, the deepening of Africa’s regional integration is necessary for harnessing the potential benefits of a large and growing internal market and for building the industrial production capabilities required for competitiveness in the dynamic sectors of global trade. Thus, enhancement of regional integration, including the Continental Free Trade Area (CFTA) will offer enormous opportunities for expanding the trade in manufactures and preparing the continent for effective participation in the more demanding global trading environment.
 
Despite the recent global trends and the rise of nationalism and protectionism I would like to believe still the global mega partnerships are going to be pursued by Africa’s trading partners. The big question is, can Africa surprise the world by delivering the CFTA by the end of 2017 as anticipated and also doubling intra-African trade within this decade? The state of play within the African Regional Economic Communities (RECs) and empirical work at ECA suggest that both are achievable. But for this to happen, there is a need to fast track the implementation strategy, including decisions on process and mechanisms.