Chris BishopBy Chris Bishop|December 29, 2020|10 Minutes|In AfCFTA

AfCFTA

It Is Going To Take Time It Is Going To Be Difficult

You can smell the fresh paint from the blinding white walls as soon as you walked through the double doors in the heart of Accra’s business district. The air conditioning blows cool and new; the smiling security guards are dressed in crisp new uniforms and usher us through a relaxed security towards the lift to the 15th floor.

At the top, in a spacious office overlooking the ocean, is the urbane trade lawyer from Uitenhage in South Africa, with the biggest and toughest job in continent. He greets the team with a smile that belies the pressure, followed by a COVID-19 elbow bump. It was the pandemic that forced the starting date to be delayed from July 1 to January 1.

Wamkele Mene, aged just 42, is the first Secretary General of the African Continental Free Trade Area who has the difficult task of welding an entire continent together in trade by sweeping away tariffs and red tape.

“It is going to be very difficult and take quite a long time so I am under no illusion about how difficult it will be to do this, but there are ways in which we can look at it and try to solve the problem. I was always told, when I was a kid, that there are nine ways to skin a cat,” he says.

On New Year’s Eve, Britain will divorce Europe; on the same night the nations of Africa will marry. It will unite 1.3 billion people in 55 countries with a combined GDP of $3.4 trillion.  The new trading bloc also promises to Increase Africa’s exports by $560 billion, mostly in manufacturing, plus attract new investment and create a new generation of entrepreneurs from Cape Town to the Mediterranean Sea.

With weeks to go to this new year of hope, Mene sits before the green-white-and gold of a spanking new AfCFTA flag and admits the continent is not entirely ready.

“Some countries have said they are ready, for example Egypt says they are ready. They said from the first of January goods that are coming into Egypt, across the Egyptian border, they will be receiving AfCFTA preference, so some countries will be ready,” he says.

There are some countries that are saying we just need more time because of COVID-19, there are some regions that are saying the same thing.We need more time because of COVID-19 we were not focused and that is understandable.


- Wamkele Mene

“There are some countries that are saying we just need more time because of COVID-19, there are some regions that are saying the same thing we need more time because of COVID-19 we were not focused and that is understandable. I think countries that have a lot of experience and multi-trade agreements, like Egypt and Morocco, they have systems to introduce this customs infrastructure much, much quicker. So, it depends on the country’s degree of experience on trade agreements and a country’s existing customs systems. “

Mene says the AfCFTA is looking into ways of ploughing on regardless.

“We are exploring a modality that will make it commercially meaningful to trade from January 1. So whenever you get your credit or your rebate the commercial meaningfulness will still be there because from the first of January 2021 you will have been trading under a new preference – you may not be getting it in your pocket – from the second of January – you may not be getting it in your pocket, but at some point what we want to work towards putting you in the same position that you would have been in if there was no COVID-19,” he says.

“I certainly hope that the credit will not only be in the form of money; it could be a reduced tariff, further reduced, to compensate you, or in the form of money. That will depend on the outcome of discussions.  But certainly, it has been done before, Southern Africa has done it and other parts of the world give rebates or credits to their traders. Some regions have created an account so the funds that were supposed to be credited to a trader go and when everybody is ready the traders are reimbursed. But that is a very sophisticated system that will take quite a lot of effort.”

In the years running up to the launch of the AfCFTA there was scepticism about the settlement system that needs to be in place to enable someone to pay in Casablanca for goods from Cape Town. Mene says the system that will take the dollar out of African trade is being worked on.

“I think the payments and pan-African payments will work….Action is being taken so the transactions undertaken under the AfCFTA will be seamless, affordable and easily accessible to millions and millions of Africans.  So, if you are in a transaction and you are sending your Cedi – your Ghanaian Cedi – from Ghana to Kenya you don’t have to convert into the dollar anymore you send you Cedi and they receive in Kenyan shillings and neither of you have to use the dollar. Afrexim Bank with its platform of payment and settlement they will be the intermediary bank and they will do the settlement,” he says.

“There is also other private sector interest from other banks on the continent – private banks – who are very interested to be part of this. So what we are doing is combining their technical skills, payment and settlement and the management of foreign exchange currency convertibility also the AfCFTA legal instrument, which, for the first time , provides a platform , a pan African platform for trade….There is already a pilot of six countries in West Africa from January and then they will be gradually rolling it out across the rest of the continent.”

But one of the biggest hurdles Mene faces is the enforcement of proof of origin – that is, ensuring that goods are made in Africa and not cheap imports from elsewhere for dumping in the markets of the continent.

“What I am extremely worried about is our capacity to enforce the rules, particularly in customs. If we don’t get the customs procedures implementation right. We have harmonised the rules, which is a big step, but the real challenge will be in implementation of the harmonised rules we have agreed to and that means that the goods have to transit the border in the time we have agreed to. It means if you have perishable products that they should be exceed a certain period of transit. It meant that we have to be vigilant against products that are in trans- shipment and trans-shipment causes job losses. If countries in the AfCFTA market will be able to take a shirt and put button on it saying ‘Made in Africa’ that is a problem – we are not industrialising. So, me enforcing the customs rules is a big concern. We will have to make sure we work very, very, hard to make sure we build the capacity of our customs throughout the AfCFTA market.”

Mene says in his childhood he heard of nine ways to skin a cat – maybe in his manhood, at the helm of the AfCFTA, he can make it 10. Forgive the choice of words, but he certainly has his work cut out for him.

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