LETTERS: Ensure Africa free trade deal benefits all citizens
African heads of states and governments during the African Union Summit for the agreement to establish the Continental Free Trade Area in Kigali, Rwanda, on March 21, 2018. AFP PHOTO
Last week was a busy one for trade and development actors following the launch of the African Continental Free Trade Area. But are such trade liberalisation agreements sufficient to address bottlenecks and barriers that continue to constrain economic growth and poverty elimination on the continent?
Do African economies have the resources to implement what they are signed up for? And what is the role of development actors in mitigating the drawbacks of agreements they are supporting?
These are all important questions, as it is in everyone’s interest that these agreements should leverage the highest and most inclusive economic benefit, and not benefit some at the expense of others.
As we know, trade liberalisation will affect our economies in different ways. Vocal critics of free trade argue that removing all barriers and other protectionist measures will devastate economies, incite dumping, put enterprises out of business, displace communities, and shut factories. And yes, without appropriate planning, that might happen.
Optimists cite more favorable trading opportunities, investment climate and economic growth as benefits to African Union membership.
However, poor infrastructure, weak governance, pervasive insecurity, corruption are several potential drawbacks that may negatively impact government revenue, historically strategic sectors, and vulnerable smallholder farmers.
Many opportunities exist to prepare weak African economies for trade liberalisation at the enabling environment level, sector level, enterprise level, and social level.
For example, supporting investment in regional value chains and promoting inter-regional trade can expose and unlock the comparative advantages of economies. It can also facilitate regional distribution of agricultural inputs for increased agricultural production and profitability.
Harmonising regional policy through legal and regulatory reform can give Africa and international investor’s access to larger markets on a regional basis, supporting economies of scale and cost competitiveness.
Introducing a single, standardised document for customs clearance throughout the region will greatly help. Investing in technical and vocational education and training can help upgrade the skills of the labour force to meet the demands of the private sector.
In Kenya, vocational education and training programmes are providing training in plumbing, electricity, cooking, welding, construction, masonry, automobile mechanics, and public works to supply needed skills to continue the our country’s rapid economic growth.
Building the capacity of institutions in investment promotion and export development can help implement needed enabling environment reforms and sensitize the private sector to barriers lifted and opportunities created.
The countries should simplify the tax payment structure and greatly streamline the business registration process, making it easier and less risky for investors to start operations and for the government to collect revenue.
For example, in Rwanda you can register a company within six hours and start operations. Sector-based support for industries that have a comparative advantage will promote systemic changes for greater impact than supporting specific firms.
Programmes supporting fruit, nut and vegetable agribusinesses in new product development, processing, and packaging technology while adding value will create great market of the farm produce.
They are also establishing export market linkages to help build competitiveness and exploit opening regional markets for agricultural products.
Entrepreneurship programmes in the past proven to spur new sectors development, especially in the services industry, which many Africa economies still lag behind on.
Such programs actively promote entrepreneurship development and the start-up of new businesses by creating awareness of how to transform creative ideas into business realities.
Development actors need to maintain close communication with host-country policy-makers, the private sector, and civil society to make sure that their programming remains current and consistent with the needs of these economies.
They should also leverage the increased capacity of host-countries’ public sectors, private sectors, and civil societies to create the needed momentum for increased and inclusive economic growth.
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