For the African Continental Free Trade Agreement (AfCFTA) to deliver on its promise, we must address concerns of entrepreneurs (by Professor Patrick Utomi) – African Business

by Professor Patrick Utomi, Chairperson of the Pan-African Private Sector Trade & Investment Committee (PAFTRAC) (http://PAFTRAC.Afreximbank.com).

The launch of the 2022 Africa CEO Trade Survey Report 2022 was commissioned by Pan-African Trade and Investment Committee and was very instructive. It is worth noting that we are now actively seeking out the opinions of the entrepreneurs who provide the goods or services we depend on. In the past, policy-makers chose to operate in a vacuum, with predictable results. We should celebrate all those involved in providing this critical perspective to the vital task of supporting businesses, boosting commerce, and ultimately improving lives and livelihoods across the continent.

The survey results paint a fascinating picture. It will  come as no surprise that African CEOs are slightly apprehensive about the future. In the long shadow of the pandemic, with disruptions in delicate global supply chain systems and the possibility of recession, only 50% of the CEOs surveyed felt confident in the future. This is significantly less than the 93% who were confident in 2022. It is no surprise that many of the global crises we face are felt in our kitchens, as we are so dependent on the outside world for so much of what we eat. This cannot continue.

This is why CEOs have such confidence in the African Continental Free Trade Agreement. When fully implemented, AfCFTA will lower trade barriers across the continent, harmonize trade regulations in all member countries, and create the largest single global market. This would bring about incalculable benefits. Our combined strength will make us a more attractive destination for investments, encourage value-adding, and, according to the World Bank – raise incomes on Africa by 7 percent and lift as many 40 million people out of poverty.

This is possible, but it requires that we listen to the people running the businesses, especially the SMES, on the continent. We must address their concerns, anticipate and create an environment that encourages innovation and rewards hard work. The report contains important clues that can help us. What CEOs are telling us is that they need a lot more information – and readily so – about the opportunities of AfCFTA and also about one another. They need to be able to facilitate cross-border trade and have payment systems that allow them to fully take advantage of the trade area. They need better logistics and trade infrastructure so that they can move their goods as smoothly as possible from Lusaka to Abidjan. It is obvious that they need African policymakers to act quickly to realize this dream, which seems almost six decades after decolonisation.

These are the things we should do. First of all, we must recognise the preponderance of micro-small and medium sized enterprise in the continent’s commercial landscape. Most African companies employ less then 500 people and have annual turnovers of less than US$ 1 million. This recognition should inform the policies we adopt to support investment and growth. These companies, often owned by women and men, are notoriously deficient in capital. This hinders their expansion as well as their sustainability. We will have to find creative ways for them to access long-term capital.  We will also help them to meet quality standards, improve packaging, gain access to lucrative market opportunities.

The AfCFTA will be crucial for cross-border transactions, payments, and freedom of movement due to its nature and goals.  This means that we must quickly formalize cross-border commerce, assuring traders of safety, security, enforceability, and the enforceability transaction, while also facilitating freedom of movement and disencumbering Customs processes. The Pan-African Payment and Settlements Systems, a system that allows traders to make and receive payments across currencies, is encouraging. Governments must also invest in trade-enabling infrastructure such as roads, ports, and warehousing.   

This enterprise will need information, as indicated by the survey respondents. Entrepreneurs are rightfully excited about the AfCFTA, and the potential it holds. To fully participate, entrepreneurs will need to have as much information as they can. An innovative platform such as the African Trade Gateway, developed in partnership by Africa Export-Import Bank, will be a great resource for entrepreneurs.

For the AfCFTA to succeed, all parties will need to have a common purpose and be committed. After decades of hard work, we are finally on the right track to building a common marketplace, self-reliance, fundamentally changing our economies’ nature. We can’t do this, however, without the entrepreneurs up and down our continent. We must listen to them, collaborate with them, and work together to achieve our goals.   

Distributed by APO Group for Pan-African Private Sector Trade and Investment Committee.