AU urges member states to create competitive business environment

African heads of state gather for a group photograph at the 35th Ordinary Session of the African Union (AU) Assembly in Addis Ababa, Ethiopia, February 5, 2022. [AP photo]

Overcoming fragmentation has been an enduring theme in African statecraft since the 1960s.

The concept is expressed in liberation songs as the 'United States of Africa'; in political and social discussions, it's referred to as 'African Unity' and in economic circles as 'Africa integration'.

But whether it's an ideological or a pragmatic aspiration, the idea of the free movement of African people, goods and services was a top agenda in this year's AU (African Union) Summit.

This year's theme was "Year of Accelerating African Continental Free Trade Area (AfCFTA) Implementation", which aims to generate greater political commitment and accelerate the effective implementation of the AfTCTA agreement.

The AfCFTA is a long-term development blueprint, Agenda 2063, a high-ambition trade agreement aiming to significantly boost intra-Africa trade.

It aims to effectively implement through eliminating barriers to trade in Africa, thereby creating the largest free trade area globally.

The agreement connects 1.3 billion people across 55 African nations with a combined gross domestic product (GDP) valued at USD 3.4 trillion. If implemented immediately, it can potentially lift over 50 million people out of extreme poverty by 2035, yet progress remains elusive two years after the pact became operational.

"The African Continental Free Trade Area has the potential to increase employment opportunities and incomes, helping to expand opportunities for all Africans. The AfCFTA is expected to lift around 68 million people out of moderate poverty and make African countries more competitive. But successful implementation will be key, including careful monitoring of impacts on all workers-women and men, skilled and unskilled - across all countries and sectors, ensuring the agreement's full benefit," says Albert Zeufack, the Chief Economist, Africa.

However, achieving the pact's full potential highly depends on African heads of states putting in place significant policy reforms and trade facilitation measures in their countries.

The move, AU officials state, has been hampered by Covid-19, the war in Ukraine, climate change, high debt incidence across African states, high cost of living, and plain reluctance by some African heads of state to implement.

There's also the heavy financial commitment nations would have to make to facilitate infrastructure, including connective roads, airports, and retraining workers.

"Creating a continent-wide market requires a determined effort to reduce all trade costs," said Afrikana Njuru, an AU policy and advocacy consultant. "This will require agreed legislation and regulations to allow the free flow of goods, capital and information across borders."

"This is an opportunity to create competitive business environments to enhance productivity and investment," she says.

Speaking from Addis Ababa where the summit is ongoing, Njuru says there's an urgent need for African heads of states to use the opportunity and roadmap the pact provides to spur Africa's economic recovery and transformation.

Octavio Diogo, an AU policy and advocacy consultant from Benin, says the borders dividing Africa's 55 countries from one another continue to diminish Africa's global presence and keep markets small and lifeless.

These borders, he says, have also prevented African citizens from reaching out to one another and taking advantage of the vast potential the continent has to offer.

Njuru agrees. "We only do 14 per cent of trade between African countries, yet we do up to 60 per cent trade with other continent countries. It doesn't make sense."

Diogo points out Zimbabwe, one of the most fertile lands on the continent, and Kenya, a country renowned for innovation.

"Why is Kenya and other East African countries facing massive food insecurity, yet their neighbour Zimbabwe is a world-class food basket?" poses Diogo.

"Free movement of African citizens would see Kenyans taking their value addition innovative skills to Zimbabwe's agricultural sector, and Zimbabwe trading food products with Kenya, ensuring East Africa is free from hunger," he says.

According to Diogo, some heads of state have been reluctant to ratify the pact, citing insecurity reasons. "I urge the heads of state to view opening up their borders as an opportunity to interrogate and strengthen their security and values," he says.

As of 2022, the Africa Visa Openness Report shows that, on balance, Africa's borders remain closed. Only three African countries offer visa-free access to all African visitors. They are Benin, The Gambia and Seychelles.

Majority others have provisions limiting which country's visitors can jet in visa-free.

Overall, 48 countries out of 55 now offer visa-free travel to the citizens of at least one other African country.

Forty-two countries offer visa-free travel to nationals of at least five other African nations.