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Professor Patrick Utomi, President of the Pan African Trade and Investment Committee (PAFTRAC) (http://PAFTRAC.Afrekimbank.com).
This week’s launch of the 2022 Africa Trade Research Report, commissioned by the Pan-African Committee on Trade and Investment, was instructive for a number of reasons. The idea that we are now actively seeking the views of our enterprising men and women who provide the goods and services we rely on is noteworthy in itself. In the past, policy makers have chosen to operate without this context, with predictable results, and so we must celebrate all involved for providing this critical angle to the most important task of supporting businesses, boosting trade and ultimately improving lives and livelihoods on the continent.
The survey results themselves give an interesting picture. It will come as no surprise that African CEOs are a little worried about the future. Operating in the long shadow of the pandemic, shaken by disruptions to delicate global supply chains, fearful of war and facing a possible recession, only 50 percent of CEOs surveyed said they felt confident about the future, far fewer than the 93 percent who felt confident about 2022. when asked in 2021. Dependent on the outside world for much of what we consume, it’s no wonder that these global crises are literally being felt in our kitchens. We can’t go on like this.
This is why the confidence CEOs have in the African Continental Free Trade Agreement is so encouraging. When fully implemented, the AfCFTA will break down trade barriers on the continent, harmonize trade regulations across member states and thereby create the largest single market in the world. The benefits of this would be immeasurable. Our combined strength will make us an infinitely more attractive investment destination, boost value addition and, according to World Bank estimates, raise incomes on the continent by 7 percent and lift as many as forty million people out of poverty.
This is doable, but it means we need to listen carefully to the people who run businesses, especially SMEs on the continent, to address their concerns, anticipate their needs and build an environment that encourages innovation and rewards their hard work. Fortunately, there are important clues in the report that can guide us. What CEOs are telling us is that they need a lot more information – and now – about AfCFTA opportunities, and about each other. They need cross-border trade facilitation, along with payment systems, that will allow them to take full advantage of the trade area. They also need better trade infrastructure and logistics so that, for example, they can move their goods from Lusaka to Abidjan as easily as possible. And of course, they need policymakers across Africa to move quickly to realize this dream that finally seems tantalizingly within reach, nearly six decades after decolonization.
So those are the things we need to do. First of all, we must acknowledge the predominance of micro SMEs in the commercial landscape of the continent. The vast majority of companies operating in Africa employ less than five hundred people and have less than a million dollars in annual turnover. This recognition must inform the policies we make as we seek to support growth and investment. These companies, often run by women and men, are notoriously short of capital, preventing their expansion and jeopardizing their sustainability. We will have to find creative ways to earn long-term capital for them. We will also need to help them achieve quality and compliance, improve packaging and gain access to lucrative markets.
Given its nature and objectives, cross-border transactions, payments and ease of movement will be critical to the AfCFTA. This means that we must move quickly to formalize cross-border trade, assuring traders of the safety, security and enforceability of transactions, while facilitating the free movement of people and freeing up customs processes. I am encouraged by the launch of the Pan African Payments and Settlement System (PAPSS), a domestic system through which merchants can make and receive payments across currency lines. In addition, governments should also invest in trade-enabling infrastructure, such as roads, ports and warehouses.
The information, according to survey respondents, will be essential for this company. Entrepreneurs are rightly enthusiastic about the AfCFTA and the prospects it presents. But they will need to be armed with as much information as possible in order to participate fully. A one-stop shop like the African Trade Gateway, a digital platform developed in partnership with the African Export-Import Bank, is exactly the kind of innovation that entrepreneurs will need and be encouraged to use in their search for information.
Ultimately, the success of the AfCFTA will require a shared purpose and a sense of commitment from all of us. After decades of trying, we are now truly on the road to building a common market, achieving self-reliance and fundamentally transforming the nature of our economies. However, we cannot do this without entrepreneurs on our continent. We must listen to them, work with them and achieve our goals together.
Distributed by APO Group on behalf of the Pan African Private Sector Trade and Investment Committee (PAFTRAC).
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