TRADE, INVESTMENT

Prioritise infrastructure development, African countries told

Tanzanian Minister says interconnectivity crucial if continent is to exploit its vast potential for industrialisation

In Summary
  • Mulalmula said air tickets across the continent were not cheap due to lack of adequate competition among existing national and private airlines.
  • Says it was far much cheaper to travel to destinations outside Africa than those within the continent.
Tanzania’s Minister for Foreign Affairs and East African Cooperation, Liberata Mulamula
Tanzania’s Minister for Foreign Affairs and East African Cooperation, Liberata Mulamula
Image: HANDOUT

African countries have been called upon to prioritise infrastructure development even as they advocate free intra-continental trade through African Continental Free Trade Agreement  framework.

Tanzania’s Minister for Foreign Affairs and East African Cooperation, Liberata Mulamula said interconnectivity across Africa was crucial if the continent was to exploit its vast potential for industrialisation, trade and investment.

Mulalmula said air tickets across the continent were not cheap due to lack of adequate competition among existing national and private airlines, adding that it was far much cheaper to travel to destinations outside Africa than those within the continent.

On efforts to create wealth through increased trade and investment, she said AfCTFA should also be focused on fair distribution and sharing of the wealth to reduce the widening gap between the rich and the poor.

The Minister noted with appreciation AfCFTA negotiations had now entered Phase II, which covers investments, intellectual property rights, women and youth in trade competition policy, and digital trade.

“We are very optimistic that phase II of the negotiations will enhance the trade environment through enhancing the market economies to function well by improving efficiency and healthy competition among businesses.” 

Mulamula was speaking at the EAC headquarters when she officially opened the 2nd Coordination Meeting of the Heads of Regional Economic Communities at the EAC Headquarters in Arusha, Tanzania.

Secretary general of the AfCFTA Secretariat Wamkele Mene said the implementation of the AfCFTA Agreement is by necessity, a complex and highly collaborative undertaking, drawing on the expertise and experience of all key stakeholders including RECs.

Wamkele said the private sector should take the lead in the implementation of the AfCFTA, noting that while AfCFTA and the RECs were supposed to facilitate across Africa, trade must be driven by the private sector.

The AfCFTA SG said Africa must prioritise industrialisation and investment promotion to make her products competitive on the global market and increase her share of global trade.

Wamkele said it was unfortunate that 55 African countries currently contribute just two per cent of global trade output and three per cent to the global GDP while Singapore, a city-state that is 600 square miles in the geographical area, has 6.2 per cent share of global trade.

The AfCFTA SG attributed this sad state of affairs to lack of industrial development and human resource gaps.

Wamkele advocated for self-sufficiency and industrialisation in the continent, noting that Africa should as a matter of urgency, develop a capacity to process its mineral and agricultural wealth if it is to benefit from its vast natural resources.

He underscored the importance of effective collaboration between the RECs and the AfCFTA Secretariat in ensuring the AfCFTA outcomes are consistent with regional advancements in trade integration made thus far and the projections for the future.

Wamkele disclosed the AU Assembly of Heads of State and Government directive mandated the AfCFTA Secretariat, the African Union Commission, and the RECs to develop a Framework of Collaboration to enhance complementarity, synergies, and alignment of programmes and activities to facilitate the effective implementation of the AfCFTA.

Speaking at the event, EAC secretary general Peter Mathuki said with a market of around 1.3 billion consumers and a GDP of $3.4 trillion, AFCFTA has opportunities to unlock trade in the continent and redesign the architectural framework of its economic systems.

He said with the implementation of AfCFTA, trade facilitation measures will cut red tape, reduce tariffs, simplify customs procedures, boost intra-African trade, and build a foundation for long-term sustainable development in Africa.

Mathuki disclosed that Africa is one of the world’s fastest-growing economies; however, trade in goods and services accounts for an estimated three per cent of global exports and imports on average.

“The share of Intra African trade remains low: on average, 13 per cent for intra-imports and 20 per cent for intra exports, while Extra African trade accounts for more than 80 per cent of the total trade. Africa’s exports to the rest of the world consist of raw materials, such as oil, gas, minerals, and agricultural commodities, with little to no value addition,” he added.

The secretary general singled out factors why intra-Africa trade is low including differences in trade regimes (eight AU recognised RECs), inadequacies of trade-related infrastructure (poor intermodal connectivity), trade finance and trade information.

Other constraints according to Mathuki were customs, administrative and technical barriers, limited productive capacity, lack of factors of market integration, and inadequate focus on internal market issues.

He said the efforts to address binding constraints are currently underway through the AfCFTA and AU’s Boosting Intra-African Trade action plan.

“If well-resourced and fast-tracked, these two initiatives will drive economic growth, industrialisation and development across Africa,” added Mathuki.

 

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