Leveraging the AfCFTA for Africa’s economic recovery post Covid-19

Until the situation is brought under control, the full economic consequences of the COVID-19 pandemic on African countries may not be known. For the crisis of this scale, things almost never return to the way they were before.

This challenging phase will ultimately lead to tough choices and opportunities that will make nations, businesses and companies scale through the uncertain economic times ahead.

While the pandemic has exposed significant vulnerabilities within African economies, it presents the continent with opportunities for redirected growth and development. The immediate shocks on livelihood as well as disruption of value chains, a decline in activities in the informal sector, government revenues, reduced remittances and industry supplies are now evident in nations across the world, Africa inclusive.

The UN Economic Commission for Africa revised economic forecast downwards, showing growth contraction of up to -2.6% from over 3% growth in 2020. This could push 27 million into the poverty net. More financial contractions will be experienced by the bulk of Africa’s workforce which operates mostly in the informal sector.
Most manifest is the transportation sector unable to function as a result of vehicular restrictions, prohibitions on movement between cities and the lockdown.

Loss of income for small-scale traders operating between countries will be evident due to border closures. Salaried workers will also be in a precarious situation as access to daily staples, utilities are affected by the lockdowns.
Another area of concern is the compromised food security and floods that have greeted the horn of Africa in recent times thereby putting a critical component of the populace in dire straits.

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In view of the pressures currently faced by African countries, trade arrangements under the African Continental Free Trade Area (AfCFTA) initially slated to launch on 1 July 2020 may have to be postponed.
The impact of this will be significant through disrupted trade patterns, economic performance, and will reflect the new realities of African economies in the liberalisation of intra-African trade.
Among Africa’s institutional inadequacies that have been exposed by the pandemic is Africa’s overdependence on imported medication and medical equipment, primarily from India and China. This leaves Africa’s health sector highly vulnerable to external shocks.

In responding to the Coronavirus pandemic, Africa must learn to internalise the externalities by leveraging adversities to its own advantage. Our policymakers must come up with proactive measures that will protect economies against the long-term effects of COVID-19. The opportunity the pandemic provides for Africa is not only to tackle institutional deficits exposed by the pandemic but to further strengthen Africa’s domestic industries and continental integration.

This will make the continent less reliant on imports and external support.

Worthy of note is the race for covid-19 therapies. With locally sourced medical and pharmaceutical products being put to the test, Senegal’s $1 testing kit looks affordable and sustainable for Africa.
In order to cut down on imports, Ghana sped up on the production of Personal Protective Equipment (PPE). In Nigeria, a Military facility increased its production of Oxygen in order to supply hospitals and isolation centres across the country. Kenya’s textile facility enhanced its production of quality and affordable face masks to a record high.
The increased production of these protective gears could shorten the supply chains of such essentials in the fight against a virus such as now and in the future. Redirecting procurement to countries within the continent in the long term will protect it from export vulnerabilities and increase job opportunities.

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credit: sciencemag.org

Therefore top priority for African countries should be health and wellbeing, investment in health services delivery. The health of Africa’s population is fundamental to every facet of life. The speed to return to the new normal should not be prioritised over health and safety of people in workspaces, markets or schools.
The peculiarities of Africa should inform response strategies as it will be very wrong to duplicate the strategies of other countries and apply them wholesale in Africa. One such peculiarity of Africa is policy response to developmental issues involving energy deficit, the extractive industry, food security and challenges around climate change.
Although some African countries like Sao Tome & Principle, Ethiopia, Nigeria and Gambia have accessed emergency response facilities from the World Bank, Africa’s economic recovery will depend largely on the inventiveness in policy redirection as well as the coordinated continental response to the crisis.

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Beyond debt-relief and health response from WHO, it is imperative that Africa taps into and exploits these opportunities with a view to forging a resilient and more flourishing continent post-COVID-19. We must ensure regional value chains and trade-related considerations are accounted for in terms of mitigation, recovery and resilience at national and regional levels.
African countries must reposition themselves in regional and global value chains. We must encourage cross-border digital trade in services, and leverage the AfCFTA for economic recovery.

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