The potential for transformation across Africa is significant
The African Continental Free Trade Area , which came into operation on January 1, is a potential game-changer for the continent.
The agreement aims to reduce all trade costs and enable Africa to integrate further into global supply chains, eliminating 90% of tariffs and creating a single market with free movement of goods and services. This can only be good for Africa as the pact comes at a time when much of the world is turning away from co-operation and free trade.
Second, there is the geopolitical challenge. More robust discussions about sovereignty and the protection of countries' own markets still need to be undertaken. Furthermore, stronger anti-dumping laws will need to be enacted. While talks are happening, these need to be fast-tracked; there needs to be political will behind it, and it needs to be fully supported.
Another critical key to success will be the ability to access vast amounts of available capital. This is where the banks and other financial institutions can play a role. At Nedbank we have adopted two approaches. The first is at the advisory level, in terms of contributing intellectual capital to workstreams aiming to refine the details of AfCFTA.Then, on a more practical level we are looking at how to use technology to empower businesses of all sizes to facilitate trade.
The private sector has a key role to play in the execution of such projects. Governments enable the environment through agreed-upon policies, and then the execution of the construction and implementation will fall to the private sector.