By Yinka Kolawole
Chairman of United Bank for Africa, UBA, Plc, Mr. Tony Elumelu, said Africa must embrace inter-regional trade to fast-track the development of the continent.
Elumelu, speaking at the World Economic Forum in Davos, noted that intra-regional trade has significantly benefited other parts of the world, adding that Africa should emulate this.
He stated: “If we look at other parts of the world, intra-regional trade helped significantly. For us to develop in Africa, we must embrace this. We need to develop and broaden the market. We need to integrate Africa by trade also. We need to carry common passports or at least simplify the border entrance so that people can move freely in Africa. People who move freely can trade – and not otherwise.”
Last year, 49 African countries signed the African Continental Free Trade Area, AfCFTA, agreement, which is supposed to do away with tariffs on most goods and other trade barriers.
The agreement will come into force once 22 countries have ratified it. With only seven more to go, it might only be a matter of weeks. So in times when others are erecting trade barriers once again, leaders on the continent are edging closer towards establishing the largest free trade area since the World Trade Organization’s inception.
It would create a market with a combined GDP of around three trillion dollars and, according to the African Union, AU, boost intra-African trade by 52 percent. As enterprises will get the chance to enter new markets, unemployment is predicted to fall and economic output to go up. And the effects in the long-run could be even more substantial.
Also speaking at the event, President of African Development Bank, AfDB, Akinwumi Adesina, considers the AfCFTA a big chance to attract investors.
“Africa is open for business, the opportunities are there,” he said. “When people look at Africa, think of the population, think of the middle-class, think of the huge opportunities to invest across borders,” he said.
But as African economies will be able to cooperate more closely, he said he hopes companies will create more elaborate value chains to produce higher-quality goods.
He stated: “Those nations who trade in raw materials are the ones that are poor. Those that actually trade in value-added products are the ones that are rich.”
But as rosy as the economic future may seem, there are, of course, also challenges that governments will have to overcome. Winifred Byanyima, the head of Oxfam International, warned leaders of what freewheeling globalization can lead to.
“We have richer countries, richer companies, richer people gaining from trade liberalization and many others left behind,” she said.