President, Africa Export-Import Bank, Professor Benedict Oramah, has said that that Africa is making gradual progress compared to two decades ago.
Professor Oramah stated this on Wednesday at the 2019 Bullion Lecture hosted by Centre for Financial Journalism, in Lagos.
Oramah noted that Africa is becoming the “bread basket” of the world from the “basket case” hitherto associated with it.
But to make further progress “Africa must break the artificial barriers that continue to tear it apart and trade more among itself. It is by doing so that it can diversify away from commodity dependence; it is by doing so that investments in infrastructure can flourish.”
Oramah who spoke on the theme: “Leveraging the Africa Continental Free Trade Agreement to Boost Nigeria’s Economic Development”, said that greater intra-regional trade promotes strong dynamic comparative advantage, helps create regional and continental supply chains, the attraction of FDIs and the nurturing of nascent industries for industrial growth.
“Leading regions, such as Europe, South East Asia, North America boast intra-regional trade share of their respective total trades in excess of 25% (some are at 65%), their GDP (in current US$) is in excess of US$4trillion. In comparison, intra-African trade share of Africa’s total trade stands at about 16% and Africa’s GDP at US$2.2trillion,” he noted.
Oramah said African Continental Free Trade Agreement was established as a continental or multilateral vehicle to facilitate African trade to promote economic development on the continent.
He stated that: “for a continent of 55 countries with different regulations, financial systems and colonial history, the quickest means to promoting regional integration is to have an arrangement that constitutes the framework for breaking the structural barriers created by the Colonial Administrators. That is why the AfCFTA is a welcome development.”
Oramah outlined the specific objectives of AfCFTA to include: progressive elimination of tariffs (removing tariffs on 90% of goods produced within the continent); progressive elimination of non-tariff barriers; enhancing the efficiency of customs, trade facilitation and transit; cooperation on technical barriers to trade and sanitary and phyto-sanitary.
The objectives also include development and promotion of regional and continental value chains; socio-economic development, diversification and industrialization across Africa; enhancement of competitiveness of services; promotion of sustainable development; fostering of investment; accelerate efforts on industrial development to promote the development of regional value chains; and finally, progressively liberalize trade in services.
He said the AfCFTA creates the environment for the continent to chart a new development path, and presents opportunities for the continent to begin the development of national, sub-regional and continental supply chains, e.g. in automotive industry.
It also offers opportunity for African countries to begin to create and nurture infant industries; and creates opportunity for African economies, including Nigeria, to take over from China as the World’s manufacturing hub. Prof Oramah said China exports 45 billion US dollars of light manufactures into Africa, arguing that Nigeria and other African countries can expect to fill that void if they take advantage of the tariff and non-tariff reductions in the AfCFTA.