Thursday, December 7

AfCFTA Could bring a new Upliftment to Africa’s Regional Economy 

The African Continental Free Trade Area (AfCFTA) is taking its first steps to fruition. However, it is going to be a long and unsteady road. But, Blockchain technology and Cryptocurrencies are one way of helping implement the agreement across borders.1 Based on the use cases and challenges examined above, it is evident that there are strong arguments in favour of introducing the functionality of cryptocurrencies in the financial architecture of the trade agreement.2 However, for it to achieve success, concerted efforts are needed as necessitated to address the implementation challenges if the gains of adoption are to be realised.3 Principally, the state parties (governments who are signatories to AfCFTA) must be co-opted as the initiative can simply not work with the political will and buy-in of governments and institutions.4   

Central Banks and financial regulators in state parties can play an essential role in a developing and enabling framework as well as providing guidelines and regulations for trading in and the taxation of cryptocurrencies.6 Infrastructural development and investment in upscaling technology on the continent are also critical in making or marring the adoption of cryptocurrency and blockchain simply do not work for trading at that level.5 Capacity building will also be required for governments, regulators, and traders.6 Grand-scale engagement and negotiations among stakeholders can be utilized in incorporating these technologies in the framework for trading under the AfCFTA in such a way that it works in the unique intra-African trading environment.7

There are no examples of any other trade areas where this has been practiced and achieved, so AfCFTA will be seen as a pioneer in that regard.8

This year the continent marked Africa month, and with that there have been stronger calls to move forward with AfCFTA.10

Rasulullah ﷺ said, ” Whoever relieves a believer’s distress of the distressful aspects of this world, Allah will rescue him from a difficulty of the difficulties of the Hereafter.”

One of the key aspects of South Africa being a signatory to AfCFTA is securing a sustainable and stable energy supply to ensure a bright future.11 With a population of 1.3 billion citizens and a combined GDP of approximately $ 3.4 trillion (about R 61 trillion), the Free Trade Zone agreement, phase one of which is starting to see incremental implementation despite some key unresolved negotiations on rules of origins and tariff scheduals, has the promise of becoming an incomparable titan amongst its regional counterparts.12 

AfCFTA seeks to gradually eliminate tariffs on 90% of goods and reduce the bureaucracy and red tape of trade barriers.13 The United Nations Conference of Trade and Development (the global trade body), estimates that the new Free Trade Area could boast intra-African trade and business, by about 33% and cut the continent’s trade deficit by 51%.14 According to a World Bank report, it could raise the revenues of African nations by 7%, or $ 450 billion, by 2035, reducing the number of the people in extreme poverty by 40 million, to 277 million.15 This underscores the immense economic benefit that can be harnessed by enhanced regional trade and integration.16

 The new trade agreement of AfCFTA should be a gift for South Africa and other African economic power houses, as it boasts manufacturing, industry and jobs. It should be the right path to lift thousands across Africa out of poverty. This could be a new means to bring education and literacy to the masses. A new platform for promoting peace, security and stability in a continent long plagued conflict, war and disease. It could end famine and stabilize food security. AfCFTA could widen the debate through education and integration, about the revival of democracy and the strengthening of state institutions.  

AfCFTA is about tearing down the old practices of doing business and building new connections. When I am referring to connections, I mean railways, roads and ports for shipping, infrastructure. It is about accessing new sources of energy, particularly renewables. It could be a new mechanism for building sustainable economies particularly around tourism. Trade and industry will be heavily impacted by its implementation, as borders are opened and a new customs union is set up across those borders. It will be a free flow of goods, services, and peoples. The lifting of age-old restrictions on jobs and services to free up the distribution of wealth between land locked and coastal African nations.  

Signatory nations will be able to build new relations with their neighbours based on corporative trust. It will serve as a foundation of trust and shared loyalty.

Article written by: Yacoob Cassim

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