Africa: After Ratifying AfCFTA, What Will We Gain?

The most important trade agreement since the creation of the World Trade Organisation (WTO), the Africa Continental Free Trade Agreement (AfCFTA) has already been signed by 54 African countries.

After Tanzania managed to make to the list recently, 39 out of 55 African is the new number of countries that have already ratified the agreement paving way for full implementation after crossing the 22 countries' threshold in 2019.

Unbeknownst to the majority of decision makers about this trade deal is, the fact that 1.2 billion people residing in the continent who turns out to be consumers with a combined GDP of 3.4 trillion US dollars, make it appear to be more of an opportunity and less liability to Tanzania.

If there is anything the completed signing of the East Africa Crude Oil Pipeline (EACOP) Host Government Agreement (HGA) can teach us is that our naturally given geographical position when combined with informed engagement and domestic preparedness, chances of reaping big are more than guaranteed.

Just in case one is wondering what AfCFTA plate has for Tanzania, the Africa Development Bank (AfDB) statistics shows that the continental Africa food import bill is currently around 40 billion US dollar and is anticipated to shoot up to 110 US dollar annually by 2025. This should serve as an eye-opener to anyone trying to figure out how exactly we are going to be integrated into this new economic web.

Throwback 1980, Africa as a whole had a sizable middle class of 100 million people, nearly a current population of Ethiopia or a prospective Tanzania's population in 2040.

Four decades later, we have around 340 million inhabitants whose daily expenditure ranges from $2 to $20, which is 35% of 1.2 billion people living in the continent. Now, these are spenders whose primary expenditure is on food which keeps rising as their income graph peaks.

And if there is anything that can embolden our new move is that most of the crops we produce in the country are highly demanded by our continental peers. This underscores the need for an assessment if we have ever thought of developing a specialized program that focuses on improving our domestic ability to 'produce for the continent'.

If one decides to have a look at a surplus of 2.6 million tons of food crops Tanzania had in 2019, stare at nearly $515.4 million earned from traditional agriculture exports, gaze on 44 million hectares of arable land, 65 per cent of labour employed in the sector and more than 60 per cent of uncultivated arable land will wonder if there is anything that we can't do.

It is from this revelation that the whole definition of commercialized agriculture spirit should be re-looked and properly integrated with the manufacturing sector so that our African consumers won't need to again feed on the raw crops. That means as we ponder the way forward, we have to project several jobs that will be created by the expanded entire value chain and the value it will create in the primary production.

Once achieved, it will make unfavourable pacts like the Economic Partnership Agreement (EPA) of low priority and give us an upper hand to dictate the terms anytime discussions for improvements kick in.

The benefits that come with AfCFTA are more than clear, in that there is no need of commercializing agriculture by making it export-oriented per se and wait to be fed by others, giving way to the adage that 'Africa produces what doesn't consume and consume what doesn't produce'.

Thanks to this pact, self-sufficiency will precede diversification, which shall also come after the advancement of the modernized production which includes application of fertilizer, improved seeds and irrigated agriculture, inter alia. And then all these will be a preparatory stage to meaningful industrialization. So advanced agricultural and industrial sectors will co-exist.

The irony with agriculture is that for it to thrive, all players involved in the supply chain must be able to deliver at their best too. And when we talk of the supply chain we mean the holistic inclusion of value addition actors from producers to consumers; farmers, traders, processors, commercial banks, insurance companies, seed companies, fertilizer companies, implement firms, and consumers, who will be beneficiaries of this integration.

Getting back to AfDB 2015's records of $40 billion food importation, this is what John Maynard Keynes - a renowned global economist - could call a "leakage in the economy". Well, instead of taking comfort in being self-sufficient, all actors in the agriculture supply chain needs to take that import bill as yet another untapped market from within, and by so doing curbing the leakage by producing and supplying what we consume.

Source: Daily News