Fifty-four countries in Africa have ratified the African Continental Free Trade Agreement. Thus, making this Treaty the most significant single Treaty ever to be solidified by a collective group of countries in the world. This Treaty makes Africa, for the very first time United on one front. So the question remains. What should the focus be for investors?
To help Africa launch the practical tools of the AfCFTA Treaty and begin trade with different countries signed on to adhere to the Treaty. As of Dec 2022, 8 countries in Africa have successfully kick-started free trade with 96 product categories.
The Treaty hopes to harmonise goods classification in the form of reinforcing national customs requirements. Reclassification of goods to mirror the world customs in line with the goals of the AfCFTA Treaty. In Addition, the AfCFTA Treaty seeks to improve systems to protect Intellectual Property Rights. The increase in oversight and protection of property rights will allow for the support of the implementation of Geographical Indicators (GI). Lastly, the AfCFTA Treaty seeks the support of pilot countries to engage in preparation for national implementation strategies.
Infrastructure Capital Investment and Agriculture Projects are first on the priority list of the ambassadors of the AfCFTA Treaty. Recently, The Africa CEO Forum held a conference to discuss the AfCFTA: the age of infrastructure throughout Africa. The objective of the conference was to discuss the implementation of the AfCFTA Treaty. The panel, complete with esteemed speakers, discussed how it should significantly affect intra-African trade, which is estimated to increase by 52,3% in 2022, compared with trade levels in 2010. Nevertheless, an infrastructure deficit could threaten this path.
Africa’s current pipeline of infrastructure projects is estimated to be worth $2.5 trillion. However, only 10% of them are likely to reach financial close because of low technical capabilities and unequal resource allocation throughout the funding project cycle. As the newly implemented free-trade agreement offers strategic momentum, can a more efficient infrastructure funding project cycle emerge from it?
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- Accelerate the establishment of the Continental Customs Union
- Achieve sustainable and inclusive socio-economic development and transformation of the member countries.
- Improve the competitiveness of member countries
- Drive industrialization, regional value chain development, agricultural development, and food security.
- AfCFTA is the Single largest untapped continental market. With 1.3 billion people across Africa. And a combined $3.4 Trillion combined GDP
To date, 54 countries have signed up to AfCFTA, 33 countries are actively commissioned.
The AfCTA Treaty is estimated to relieve 30 Million Africans from Extreme-Poverty conditions.
Key tech trends that were driving change innovation in infrastructure
- $170 million Infrastructure needs to improve Infra-tech, operation resilience, sustainability, and development in financing.
- $109 million gaps observed in the Intra-Tech physical infrastructure
- Infra-tech:Road Tariffs, Electricity cost $.2/kWh, ports efficiency handling cost, electrification rate, unpaved roads.
- 60% of global infrastructure spend of $97T between 2019-2040 will be in Asia and not Africa
- Increase in Infrastructure development loans
Effects of these poor infrastructures lead to higher direct transport costs, longer delivery time, low adoption of technology, and hampered economic growth. Africa is not a global player in the world of trade as a result of the transportation and logistics industry defects. AfCFTA aims to reduce tariffs on 90% of goods and facilitate the free movement of goods, services, capital, and people. This will help release the pressure on the bottle-neck and hindrance to world trading capacity.
The AfCFTA Treaty must establish a Trade Code of Conduct Policy to help Fast-Track and surpass Borders and Custom limitations impeding regional trade, especially for agricultural goods with a short shelf-life. A Fast-Track Permit can increase delivery time and increase demand for products, which would, in turn, increase revenue.
A Code of Conduct Fast Track Permit must include: Mandates on Gender-Equality adoption and maintenance clause for both Suppliers and Traders to not employ under-aged workers and pay at least the legal minimum wage for their home country. In Addition, not making employees work excessive overtime and adhere to basic safety standards for staff.
Those who take on Fast-Track trade permits under AfCTFTA are subject to periodic on-site ethical standards audits by members of the AU and a neutral third-party agency. The audit outcomes should result in substantiated corrective action plans, whereby traders have 120 days to respond and correct findings from the auditor and be subject to losing Fast-Track permits and a permanent trade ban under permitted regulatory standards.
We must acknowledge that the root cause of ethical issues in international business and trade is the variation among nations’ political systems, laws, economic development, and culture. What is a legal practice in one country that may be considered illegal in another? (cite)
As the AfCFTA Treaty rolls out, it is safe to say it is not Ok for multi-nation nations to endorse poor working conditions and traders/suppliers. A great demonstration of tools that can support change is known as the Sullivan Principle, named after Leon Sullivan. Code of Conduct specifically focused on Environmental Pollution. Requirement Sellers to address the dumping of toxic chemicals, and toxic materials in the world, and air emission management. The Code of conduct for environmental pollution must require those who see FastTrack Trade permits to adhere to common standards regarding pollution control.
Code of Conduct against Bribes: This code outlaws bribes to foreign movement officials to gain business. Establish regional trade blocs. Launching a single common currency for trade(crypto). Regional Economic Integration can improve agreements among countries in a geographic region to reduce tariff and non-tariff barriers to the free flow of goods, services, and factors of production between each other. To Fast Track, regional integration is a single currency that could be potentially achieved through ECOWAS.
An example of Levels of Economic Integration entails accessible trade areas, customs unions, common markets, economic unions, and political unions. The Customs Union is committed to eliminating trade barriers and adopting a standard external trade policy. Additionally, Common Market is committed to eliminating trade barriers by adopting external trade policy and allowing factors of production to move freely between members. The Economic Union is committed to eliminating trade barriers by adopting a common currency (crypto) that must harmonize tax rates and pursue a common external trade policy. Lastly, the Political Union is dedicated to the political apparatus coordinating its member states’ economic, social, and foreign policy.
These common economic integration unions and markets would allow for workforce and career developments, which would limit the restrictions of work-permit to gain new skills within a common union or region members. This way, labor, and commercial law are integrated, creating room for checks and balances.
Implementation of the AfCFTA Treaty on a Continental Level, country to country, and implementation on a national level between states and internal-regional to remove tariffs, eliminate non-tariff barriers, and implementation at the private sector level.
The AfCFTA Treaty means for investors an opportunity to invest more in Fintech products that enhance and extend capital resources to agriculturalists. Agriculture creates explicitly a massive potential for growers impacted by climate change conditions to see countries like Nigeria with only 20% of its arable land used, leaving 80% of available land space not in use for food production and agricultural sustainability. Investment in the AfCFTA Treaty means improving the food insecurity issues experienced globally and procuring techniques that can improve farming safety and preservation.
Infrastructure tech is a new wave for investors to improve electricity access, railways, road development, and water, which have caused significant constraints for the private sectors.
So, the question remains. What should the focus be for foreign investors interested in trading within this new African Union Member States? SV-NED, a leading organization known as the business accelerator for billions in the Diaspora, has worked arduously on forcing a spotlight on talents that reside on the continent of Africa. SV-NED has solidified its legacy in Silicon Valley as the foremost organization that has attracted investments into multiple tech industries throughout the African continent. Since its launch, between 2016 to 2022, Nigeria has gained a sharp increase in more capital investments into the tech startup community.
The AfCFTA Treaty means investors can increase capital spending on Fintech products that extend capital resources to agriculturalists. Agriculture creates explicitly a massive potential for growers impacted by climate change conditions to see countries like Nigeria with only 20% of its arable land used, leaving 80% of available land space not in use for food production and agricultural sustainability. Investment in the AfCFTA Treaty means improving the food insecurity issues experienced globally and procuring techniques to improve farming safety and preservation. The Chairman of FBNQuest Trustees, Seye Kosoko advised that Infrastructure tech is an opportunity for investors to improve electricity, railways, road, and water access, which have caused significant constraints for the private sectors. Eliminating this barrier will move commerce forward.
