INDEPTH | Day Ghana handed over the AfCFTA secretariat to the African Union

Ahead of the commencement of trade under the African Continental Free Trade Area (AfCFTA) on January 1, 2020, on Monday, the government of the Republic of Ghana, officially handed over the new AfCFTA secretariat building in the country’s capital Accra, to the African Union

The official handover cum commissioning of the AfCFTA secretariat building was carried out by President of Ghana His Excellency Nana Akufo-Addo, who handed a symbolic key to the chairperson of the African Union Commission Moussa Faki Mahamat, in the presence of high-level dignitaries including the first-ever Secretary-General of the AfCFTA Wamkele Mene.

It would be recalled that Ghana was selected as the host of the AfCFTA secretariat in July 2019, on the occasion of the 12th Extraordinary Session of the Assembly of Heads of State and Government of the AU, in Niamey, Niger. Previously, the legal instruments for the establishment of the African Continental Free Trade Area (AfCFTA) had been adopted and signed at the 10th Extraordinary Session of the Assembly of Heads of State and Government of the AU, in Kigali, Rwanda, in March, 2018

AfCFTA, the largest free trade area in the world in terms of the number of participating countries since the formation of the World Trade Organization (WTO), seeks to create a single, liberalized continental market for goods and services; allow for the free movement of business persons, ultimately leading to the establishment of Pan-African institutions such as a continental customs union. It also aim to ensure the removal of tariffs on 90% of goods produced by AU Member States and  consequently, expand and enhance trade between African countries, transforming the continent`s economy and improving the livelihood of its people.

In a move to fast-track the establishment of a Pan-African free trade area, in January 2011, an AU summit had endorsed the recommendation of the 6th Ordinary Session of AU Ministers of Trade (AMOT) on Boosting Intra- Africa Trade (BIAT) held in Kigali, Rwanda, in November, 2010. It was aimed at deepening market integration in Africa and significantly increasing the volume of trade that African countries undertake among themselves.

Subsequently, in May 2019, having met the minimum threshold of twenty-two Member-State-ratifications needed for the AfCFTA to come into effect – with Ghana and Kenya being the first to deposit their instruments of ratification with the AU Commission – Ghana was selected as host of the AfCFTA secretariat by AU member states. Ghana was therefore requested by the AU Assembly to work with the Commission to ensure an expeditious and efficient process of establishing a permanent secretariat for the AfCFTA in Accra. In the interim, the Commission had temporarily hosted the AfCFTA secretariat in Addis Ababa, Ethiopia.

Low intra-African trade, a defining characteristic of Africa’s poverty – President Akufo-Addo

President of the Republic of Ghana Nana Akufo-Addo, in his handover address, decried the low-level of trade between African countries which currently stand at around 16%, compared to other regions of the world such as European Union’s 75%.

“We, in Ghana, believe that an increase in trade is the surest way to deepen regional integration in Africa. It will mean a rapid increase in the exchange of agricultural, industrial, financial, scientific, and technological products, which would significantly enhance our economic fortunes as a continent, create prosperity, and provide opportunities for employment for the broad masses of Africans, particularly the youth,” he said.

President Akufo-Addo affirmed that effective implementation of the AfCFTA would dispel the notion that the AU was not capable of executing its own decisions, adding that the commissioning of the AfCFTA secretariat had amply demonstrated Africa’s new sense of urgency and aspiration of true self-reliance. “So, I urge Member States to put in an extra effort to conclude all outstanding implementation issues, for their adoption by the AU Assembly in the next Extraordinary Summit scheduled for December 2020, to pave way for the smooth commencement of trading from 1st January, 2021,” he urged.

The Ghanaian president said the COVID-19 pandemic had heightened the importance of the success of the AfCFTA adding that the pandemic had reinforced the necessity for closer integration amongst African countries, “so that we can boost our mutual self-sufficiency, strengthen our economies, and reduce our dependence on external sources.”

“We are now the world’s largest free trade area since the formation of the World Trade Organisation, and we must make it count. Covering a market of 1.2 billion people, with a combined GDP of $3 trillion, across the fifty-four (54) Member States of the AU that have signed up to the Agreement,” he said. “The world is watching to see whether the Secretariat will, indeed, provide the springboard for Africa’s economic integration and rapid growth, and I am confident that, under your [Wemkele Mene’s] tenure, it will,” he said.

Africa’s successful handling of COVID-19 proves readiness for AfCFTA implementation – AUC chairperson

In his speech, the AU commission chairperson, H.E Moussa Faki Mahamat, applauded the steadfast leadership of the Ghanaian government which ensured the country made a strong and legitimate case for the AfCFTA secretariat to be hosted in Ghana which, he said, only affirmed Ghana’s long-held commitment to pan-Africanism.

Mahamat described Ghana as a historical trading centre for gold, cocoa and timber among other valuable goods, adding that the West African nation remained an important center of commerce on the continent and beyond.

“Accra is also, and has always been a guardian of our collective Pan African memory, not only as a home of thought but also as a port of safety and freedom for fellow Africans fleeing persecution, and for people of African descent seeking refuge or simply coming back home,” the AU Chairperson recalled. “Indeed, today marks a historic milestone in the road to fullfil the vision of our Founding Fathers for Continental Integration, which dates back to the inaugural session of the OAU in 1963, articulated most strongly by then President Kwame Nkrumah in his landmark speech.”

Mahamat said while the operationalization of the secretariat was postponed due to the COVID- 19 pandemic, the same pandemic had also magnified the urgent need for speeding up processes to accelerate economic integration in Africa. “This crisis with its negative impact on trade and the multilateral system, is also an opportunity to rethink our value chains and reduce our reliance on traditional supply routes.”

The top AU Commission scribe also emphasized the need for Africa to continuously demonstrate the resilience and sense of cooperation it had established in the face of the common threat posed to it by COVID-19.

“When Covid19 hit, Africa took strong and early action, to the surprise of many. We opened essential corridors to facilitate the transport and delivery of urgently needed equipment and first responders to member states. We also set up a pooled procurement platform of medical supplies for member states, and Africa CDC, the AU agency for public health emergencies, is ably coordinating the continental response,” Mahamat recalled.

Nonetheless, in successfully tackling the pandemic, Mahamat believes the African continent had demonstrated its capacity to tackle the challenges that would come with the implementation of the AfCFTA Agreement.

“‘The task ahead is great indeed, heavy is the responsibility; and yet it is a noble and glorious challenge. A challenge which calls for the courage to believe, the courage to dare, the courage to do, the courage to fight, the courage to achieve,’ ” concluded the AUC chairperson quoting the exact words of Kwame Nkrumah, Ghana’s founding president and one of the leading lights of modern Pan Africanism.

AfCFTA: Africa’s opportunity to confront contemporary economic development challenges – Secretary-General Mene

In his remarks, the South African-born first secretary-general of the AfCFTA secretariat, Wamkele Mene, described the AfCFTA operationalization as an opportunity to confront Africa’s contemporary trade and economic development challenges, namely; market fragmentation, smallness of national economies, over reliance on the export of primary commodities amongst others.

“In other words, Africa continues to be trapped in a colonial economic model, which requires that we aggressively implement the AfCFTA as one of the tools for effecting a fundamental structural transformation of Africa’s economy. We have to take action now, to dismantle this colonial economic model,” he urged.

Mr Mene said the Agreement held the potential to boost intra-Africa trade, improve economies of scale through an integrated market as well as sending a strong signal to the international investor community that Africa was open for business, based on a single rule-book for trade and investment. “It has the potential to be a catalyst for industrial development, placing Africa on a path to exporting value-added products and improving Africa’s competitiveness both in its own markets and globally.”

The AfCFTA scribe however decried the unprecedented challenge to the global economy and the multilateral trading system resulting from the COVID-19 pandemic which, he said, posed the risk of reversing the modest gains made in placing development at the centre of the multilateral trading system, since the launch of the Doha Development Agenda in 2001. He therefore advised that “Africa’s response against this strain on the multilateral trading system must be to consolidate and advance our continental market integration objectives, through the AfCFTA”.

“The ongoing Covid-19 crisis has ravaged global economic activity, has severely disrupted trade and global supply chains, and of course, has had a negative effect on global public health. Africa should not despair and fall into despondency – from a trade perspective, we should see this crisis as an opportunity – through the AfCFTA we have an opportunity to reconfigure our supply chains, to reduce reliance on others and to expedite the establishment of regional value chains that will boost intra-Africa trade and secure Africa’s productive capacity for generations to come,” Mene said.

Mene said the AfCFTA secretariat would work towards ensuring shared and inclusive benefit of the economic growth to be brought by the operationalization of the AfCFTA, because “If the AfCFTA is perceived to be benefiting only a handful of relatively industrialised countries in Africa such as my country South Africa, and a handful of African Multinational Corporations, it shall be rejected by Africans, and deservedly so,” the secretary-general noted.

The AfCFTA chief however, acknowledged that more implementation-related challenges were still ahead. He particularly identified transshipment of goods from third countries that are outside of the AfCFTA zone as a significant risk. “The AfCFTA Secretariat will work closely with customs authorities to ensure that through robust implementation of the AfCFTA rules of origin regime, the prevention of transshipment is an absolute priority. The AfCFTA must create jobs, it must not create job losses through transshipment of third country goods into the AfCFTA market,” he assured.

Commissioning of AfCFTA secretariat a strong milestone in the vision of an integrated Africa – AU chair

South Africa’s president cum current chair of the AU, Cyril Ramaphosa, in his goodwill message sent to the ceremony, described the commissioning of the AfCFTA secretariat as both a significant milestone and a strong affirmation of the vision of an integrated Africa, as envisioned by the founding fathers of the defunct Organization for African Unity (OAU) including Ghana’s Nkrumah, fifty-seven years ago.

President Ramaphosa therefore reassured Mr Mene of his unwavering support, as he begins his onerous task of ensuring the successful implementation of the AfCFTA. “Mr Mene, you are facing enormous challenges ahead, but they are not insurmountable. When successfully implemented, the AfCFTA will be a huge milestone towards the realization of Agenda 2063, the Africa We Want,” he told the pioneer secretary-general of the AfCFTA secretariat.

The AU chair also expressed his concern about the negative impacts of the pandemic on Africa, namely, exchange rate depreciations, decline in Africa’s GDP and ultimately, the postponement of the commencement of trading under the AfCFTA – which had been moved from July 1, 2020 to January 1, 2021 – as well as the postponement of the planned extra-ordinary summit of the AU Assembly on AfCFTA – which was originally scheduled for May 2020 in South Africa but had now been postponed to December 5, 2020.

“We welcome the progress achieved thus far in the implementation of the Niamey Decision of July 2019, but we also acknowledge the challenges that still exist in the negotiations at the moment, in particular around the issue of Rules of Origin and Trade offers, as well as trade in services. We are confident that, through your leadership and the determination of the AU Member States, all bracketed issues should be resolved,” wrote Ramaphosa.

The South African president however noted the important gains made by Africa in the areas of poverty reduction and public health, as well as progress with respect to political unity and economic integration on the continent. Moreover, he reiterated the strategic importance of a consensus among AU member states that peace and security on the African continent was a prerequisite to sustainable economic development. “Accordingly we must continue our efforts to silence the guns so as to achieve the African we want.”

President Ramaphosa reaffirmed the commitment and resolution of the AU towards ensuring Africa emerged stronger in the post-COVID-19 era so as to usher in prosperity and development on the African continent. “The road to economic recovery may be long and pose many challenges. But we are ready to tackle and overcome any adversity when we act together,” he assured.

Since coming into force on May 30, 2019, 54 out of the 55 AU countries had signed on to the AfCFTA Agreement, while 28 countries have ratified it – the fastest ratification of any agreement in the history of the Union. Economic experts and pundits believe the landmark agreement which is a flagship project of the AU’s Agenda 2063 could be Africa’s long awaited game-changer. One that could spur socioeconomic development on the continent and make Agenda 2063’s aspiration of achieving “a prosperous Africa” a reality.

The AfCFTA is bringing together Africa’s 1.3 billion people and creating a $3.4 trillion economic bloc. According to recent study by the World Bank, if implemented properly, by 2035 the Agreement will lift 30 million Africans out of extreme poverty and 68 million others out of moderate poverty. The same study projects the AfCFTA has the potential to increase intra-Africa trade by 81%, by 2035; boost Africa’s income by $450 billion by 2035; as well as increase Africa’s exports by $560 billion.