Agricultural experts at the Malabo Montpellier Panel
analysed the potential opportunities for African national governments and its
eight regional economic communities to trade more effectively in this new
paradigm, including ways to leverage informal cross-border trade.
Informal trade accounts for 30 to 40 per cent of total trade
within the Southern African Development Community (SADC), and as much as 86 per
cent of Uganda’s official exports.
The AfCFTA will be one of the largest free trade areas in
the world since the establishment of the World Trade Organization (WTO),
covering a market of more than 1.2 billion people and up to US$3 trillion in
combined GDP.
The agreement also creates the opportunity to increase
intra-African trade by more than 50 per cent, adding an estimated US$76 billion
in income to the rest of the world.
“Lagging far behind other major regions of the world like
the EU in terms of trade between individual countries, the African Union and
its member states have made a commitment to foster the links between domestic
markets across the continent,” said Ousmane Badiane, co-chair of the Malabo
Montpellier Panel, which authored the report.
“This new trade deal comes at an opportune time for the
continent to support fast-transforming economies and meet a surging domestic
demand fuelled by a rapidly growing population and urban middle class.”
The trade area comes into force as the Africa population
continues to grow, rising from 1.2 billion people to an estimated 2.2 billion
by 2050, creating exponential demand.
Yet the continent already relies on food and agricultural
imports worth approximately US$72 billion per year, growing by 3.6 per cent
each year of late.
And in the midst of the COVID-19 pandemic, estimates show
that Africa’s trade volumes are projected to decrease by eight per cent for
exports and about 16 per cent for imports during 2020.
The Panel’s recommendations include improving information
and data on crossborder trade, particularly on informal cross-border trade, for
instance, data on its scale, quality of products, and patterns of trade flows.
This would support simplifying regulations, providing
training on food hygiene, enhancing access to finance, and addressing
entrepreneurship skills.
“Many of those reliant on cross-border trade for their
livelihoods are women, who have been disproportionately affected by
restrictions, border closures and curfews enforced due to Covid-19, alongside
gender-based discrimination and violence,” said Ishmael Sunga, member of the
Malabo Montpellier Panel and Chief Executive Officer of the Southern African
Confederation of Agricultural Unions (SACAU).
“Once the AfCFTA is in place, wages for skilled and
unskilled women are expected to rise by up to four per cent by 2035, through
new employment opportunities across the agriculture value chain.”
The report outlines how to address tariff and non-tariff
barriers, and how to improve and expand infrastructure, for instance by
addressing cumbersome customs procedures, roadblocks, subsidies, and technical
barriers such as sanitary and phytosanitary (SPS) rules.
New digital solutions can help, such as introducing radio
frequency identification (RFID) or microchipping for tracking livestock, or the
digital storage and exchange of safety certificates for easy and quick
transmission across countries.
The report also provides examples of how to enhance value
chain competitiveness and strengthen crisis preparedness and resilience, with
emphasis placed on those food products that are of high value and contribute to
improved nutrition at the same time.
This calls for investments into the design and development
of technologies that improve both the quantity and quality of food.
Furthermore, the provision of training facilities needs to
be enhanced to expand access to opportunities for skill development and
innovation capacity along the value chain.
“Rule-based open trade is essential for an efficient and
sustainable African food system, and keeps food prices more stable, which is
good for producers and consumers,” said Joachim von Braun, co-chair of the
Malabo Montpellier Panel.
“The next ambition can be a fair and deep trade partnership
between the African Union and the European Community.”
Every year, between 10 and 12 million young Africans enter
the job market, vying for one of only about 3.1 million jobs created.
Although agriculture and informal sectors are already the
highest employers on the continent, they are likely to accelerate employment
creation as the demand for food across the continent rises.
“As mechanization and digitalization expand across food
systems, new entrepreneurship opportunities – beyond the farm – will emerge in
the agri-food sector, creating the potential for high-quality, sustainable jobs
across Africa,” said Debisi Araba, member of the Malabo Montpellier Panel
member and managing director of the African Green Revolution Forum (AGRF).
The Panel drew on the experiences of Africa’s existing
regional trading blocs, such as the Common Market for Eastern and Southern
Africa (COMESA), Economic Community of West African States (ECOWAS), and the
Southern African Development Community (SADC), including governance systems,
institutional policy innovations, and programmatic interventions.