JOHANNESBURG - The much-touted African Continental Free Trade Area presents compelling potential benefits for businesses on the continent, but not many are loudly voicing their support of the agreement, probably due to skepticism in a region with a long history of trying, but failing to get its countries to pull in the same direction, a senior First National Bank official said on Monday.
Most African countries have signed the AfCFTA, which aims to create a single market for goods and services and facilitate the free movement of people, capital, goods and services among all participants.
If successfully implemented, the free trade pact would creation a massive market of close to three billion people with a combined GDP of well over US$2 trillion.
"But while these big picture predictions are all good and well, many businesses across Africa are still wondering what, if anything, the successful implementation of AfCFTA will mean for them, and whether it is actually in their best interests to be supporting the initiative," FNB regional director for Gauteng East Zak Sivalingum said.
"The short answer to that question is a definitive, yes. If for no other reasons than the fact that AfCFTA has the potential to create an intra-African trade market that most businesses would otherwise never have thought possible."
"So, the fact that AfCFTA will effectively open up markets, literally next door to most African countries, and enable trade to take place at a fraction of the cost involved in dealing with completely separate continents, should have most businesses across Africa rushing to show their support of the agreement," he added.
The successful implementation of AfCFTA also presents the potential for Africa to find a workable solution to its growing youth unemployment crisis, with some estimates showing the continent needs to create around 30 million jobs every year, for at least the next 30 years.
"While a free trade Africa is by no means the silver bullet solution to the continent's youth unemployment challenge, it will almost certainly result in economies of scale, access to cheaper materials and business inputs, and enhanced regional value chains," Sivalingum said.
"All of these are the building blocks for a business environment that is highly conducive to growth and investment - which are undoubtedly the two keys that will unlock the full potential of Africa's young employee base."
He urged African businesses to start positioning themselves to take full advantage of AfCFTA when it is officially implemented in the middle of 2020, by revisiting operational and growth strategies to include opportunities for possible expansion across the continent or at the very least include businesses in other Africa countries in their value chains.
"Ultimately, the main stakeholders in African trade are African businesses and investors," Sivalingum said.
"As such, their input into the design and operational implementation of AfCFTA is critical to its ultimate success. It is no longer enough for businesses on the continent to hope that all the benefits of free trade in Africa are opened up to them; now is the time for them to make that happen."