The Secretary General of the African Continental Free Trade Secretariat, Wamkele Mene, says leveraging on the African Continental Free Trade Area (AfCFTA) agreement, African leaders must accelerate the continent’s industrialisation with renewed impetus and vigour.
He argues that about 300 million businesses across the African continent may not be able to take advantage of the opportunities offered by the AfCFTA agreement, saying “remaining informal diminishes their ability to take advantage of opportunities offered under the agreement.”
He added that the implementation of AfCFTA will result in 97 per cent of Africa’s products being traded at zero duty in less than 15 years, thereby increasing trade and investment and significantly boosting the continent’s efforts at industrialisation.
The move, he said, would also facilitate the establishment of essential regional value chains, where two or more regional member states are jointly involved in producing for some other country or for themselves, which could accelerate Africa’s integration into the global economy.
Mr Mene was speaking at a lecture at the University of Dar es Salaam in Tanzania on Monday, where he pointed out that AfCFTA is creating a new narrative that should inspire talented African youth, living in any part of the continent, to imagine opportunities across the value chain and to pursue entrepreneurship in the various sectors.
He noted that more equitable access to the opportunities arising from the implementation of AfCFTA would create shared prosperity and reduce vulnerability to future shocks, including ensuring the effective participation of Small and Medium Enterprises (SMEs), women and youth-led enterprises in the AfCFTA.
Mr Mene further said that AfCFTA, as an important integration initiative for Africa, “stands to address some of the most harmful barriers to regional integration, and also contribute to supporting post-Covid-19 reconstruction and economic transformation, embracing all the potentials of its 55 countries.”
The Secretary General underscored the need for Africa to rapidly industrialise to create jobs.
He referred to countries like North America, Western Europe and Asia which experienced similar demographic pressures in their past, saying industrialization, however, enabled them to create jobs and welfare simultaneously.
He noted that Africa’s industrialisation policies rest on manufacturing due to its multiplier effect on other sectors of the economy.
Mr Mene said that even though manufacturing is the “engine of growth” that enhances higher levels of productivity and greater technical change, thus creating more jobs with higher wages for both women and men industrialisation in 21st century Africa calls for innovative strategies that go beyond sectorial approaches that target only manufacturing.
“Africa can industrialise by promoting all economic sectors that have potential for high growth and employment creation. Certain tradable services and farming activities such as the agro-industry, have become comparable to those of conventional manufacturing. These activities produce higher quantities of goods (at lower marginal costs) which can then be exported, increasing competition and productivity,” he suggested.
“The potential of non-manufacturing sectors for industrialisation becomes more important in the context of the Fourth Industrial Revolution, where robotics and additive manufacturing tend to replace low-skilled workers in manufacturing activities,” he added.
“The challenge for Africa is how to embrace the Fourth Industrial Revolution with its disruptive character, whilst at the same time, leveraging it to accelerate industrialisation. Start-ups and small and medium-sized firms with high-potential can complement the growth of large companies in driving Africa’s industrialization,” Mr Mene continued.
Opportunities for entrepreneurs
He said that Africa’s long-term growth trends and large unmet needs present entrepreneurs and investors with exciting opportunities for business building.
He believes Africa is filled with talented people who, with capital and training, can deliver enormous returns and drive the economic change that is needed.
“African entrepreneurs, with their energy, expertise, initiative and sense of responsibility, are creating products, opening new markets, and utilising innovation creating opportunities, markets and solutions to social and environmental challenges. Africa’s problems are best addressed with African solutions, driven by Africans. It is Africans and African entrepreneurs that will grow the African economy, creating an integrated, prosperous, and peaceful continent,” he said.