AfCFTA is a key instrument in post Covid 19 recovery
South Africa; the Deputy Minister of Trade, Industry and Competition, Mr Fikile Majola says it is imperative for South Africa to look beyond its borders to accomplish the task of inclusive economic growth and job creation in the wake of the Covid 19 pandemic.
He was delivering the main address at the virtual Africa Day commemoration of the National Council of Provinces (NCOP). Majola says it is critical to move with speed towards building a strong foundation for Africa’s inclusive economic growth and the African Continental Free Trade Area (AfCFTA) provides the platform to advance this core objective.
The 13th Extra-Ordinary Summit of the African Union Heads of State and government on the AfCFTA held on 5 December 2020 provided the legal basis for the operationalisation of preferential trade from 1 January 2021. This has been a significant step towards the realisation of a socio-economic integrated continent.
The AfCFTA will create the largest free trade area in the world by the number of countries participating and connect 1,3 billion people across 55 countries with a combined GDP valued at U$ 3,4 trillion. However, to make this a reality significant policy reforms and trade facilitation measures are also necessary.
Majola says one of the instructive lessons learned from the Covid 19 pandemic is that economic resilience and self-sufficiency are critical. He says given that many of the African countries do not have the means to cushion themselves against the resultant economic devastations it is important to build up industrial capabilities, trade and supply chains across African countries.
“Our country accounts for approximately a quarter of intra-trade in the continent and will benefit massively from driving the consolidation of Africa’s integrated market. The creation of capacity to produce PPE in the fight against COVID-19 has also given South Africa the opportunity to become a supplier to the SACU communities and broader African continent,” Majola said.
The importance of African trade in South Africa’s overall trade continues to grow. In 2019, 27% of South Africa’s world exports and 12% of world imports were intra-Africa. South Africa continues to record a large trade surplus with the rest of Africa, exporting mainly mineral products, machinery, chemicals and iron and steel products, which accounts for over 50% of its total exports to the rest of the continent.
South Africa’s exports into Africa grew from about R 9 billion Rand in 1994 to over R 340 billion by 2019. Considering that in 2019 Africa imported about R 8 trillion worth of goods, South Africa’s share of global exports into Africa is still relatively small. This is bound to change with the implementation of the AfCFTA.
Majola told the members of the NCOP that the continent’s full potential will remain unfulfilled unless efforts are made to address the challenges of poor infrastructure, small and fragmented markets, under-developed production structures and inadequate economic diversification.
