The African Union said it will work to speed up its industrial development agenda and reconfigure supply chains to overcome the continent’s trade and logistics challenges that have been highlighted by the coronavirus pandemic.
The continental body will seek to accelerate industrial development through the establishment of regional value chains and active private-sector participation, Chairman Cyril Ramaphosa, who is also South Africa’s president, said in a statement. The statement commemorating Africa Integration Day was co-signed by Mahamadou Issoufou, the president of Niger, and AU Commission Chairman Moussa Faki Mahamat.
The continent-wide free-trade area offers the best platform to accelerate regional integration in the wake of the coronavirus pandemic, Ramaphosa said. The establishment of a duty-free zone is “defragmenting Africa to put behind us the history of small uncompetitive markets that have thwarted our efforts to achieve inclusive sustainable development for the benefit of our people,” he said.
Although the trade agreement entered into force legally last year, business that was due to start on July 1 has been delayed as the virus set back negotiations on the protocol for trade in goods, including tariff concessions. A new date first commerce under the agreement has yet to be finalized.
Set to be fully operational by 2030, it could be the world’s biggest free-trade zone by area, with a potential market of 1.3 billion people and a combined gross domestic product of $3,5 trillion. Fifty-four of the 55 nations recognized by the African Union have signed to join the area — Eritrea is the exception — while 28 have ratified the agreement.
Africa lags other regions in terms of internal trade, with intra-continental commerce accounting for just 16% of the total, compared with 58% in Asia and more than 70% in Europe. The agreement aims to change that by lowering or eliminating cross-border tariffs on 90% of goods, facilitating the movement of capital and people, promoting investment and paving the way for a continent-wide customs union.
Sources: AU | Bloomberg | CNBC Africa | JIC Media