One A Matter Of Weeks To Go Now. What Is The Greatest Hurdle You Are Facing?

Wamkele Mene: The big hurdle that we have in place that we have to overcome is customs readiness that is required by each country to allow goods to move through their borders. It is a very technical exercise; every country has to establish a new tariff book for AfCFTA goods so when the goods cross the border the customs people can match them with the new tariff schedule. That usually takes six to nine months, even in the most sophisticated economies it takes time. We unfortunately have had this COVID delay so we could not move as fast as we wanted to. Now we are going to have to come up with very innovative ways of coming up with a way of keeping January 2021 date. But if a particular country for whatever reason doesn’t have the infrastructure in place the trader will still get credit for his or her goods that transit the border from the first of January 2021. They will get some kind of rebate in recognition that for six months the goods have been crossing the border and they should have been receiving this AfCFTA preference, but from a customs point of view there is no state of readiness we now have to recognise. We are working on it with the DGs and heads of customs authorities. Here in Ghana they are meeting today and are meeting again tomorrow with a view to, as much as possible getting us to a point of readiness. 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.

Billionaire Tomorrow: How many countries are ready?

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.

Billionaire Tomorrow: What you are saying is traders in countries that are not ready in six months to a year’s time they will get a bonanza of back fees?

Wamkele Mene: That is what we are exploring. 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.

Billionaire Tomorrow: Will you get your money back – one day – if you are a trader?

Wamkele Mene: 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. We are looking at all of these possibilities with different modalities.

Billionaire Tomorrow: What about the settlement system. A lot of people say it will be very difficult to work, what is you’re feeling about that?

Wamkele Mene: I think it will work, I think the payments and pan-African payments will work….actions 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. So, they have already been working on this for quite some time. 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. If course there will be challenges that’s for sure. At the moment each region has its own payment and settlement platform like SADC and the EAC so the big challenge that will have to be overcome is the inter-operability across regions and each region being able to switch on to the platform. Central banks have a very critical role to play, in this regard, because you can convince easily fintech’s and private banks about the importance of this and how potentially it is a game changer, you need the central banks on board, if you don’t have the central banks it makes it very difficult.

Billionaire Tomorrow: So, the central banks are on board?

Wamkele Mene: We are working with them we are trying to meet with them to explain our vision but I think like any process it will take time to address some of the concerns the central banks have raised.

Billionaire Tomorrow: What is their main concern?

Wamkele Mene: Their main concern is the issue of inoperability from a technical standpoint…Liquidity where are we going to get the backstop from and is there sustainability even though Afreximbank has signalled that they will invest $500 million dollars to begin, obviously there will be a need for more. So these are some of the concerns I think we have to work through. I am encouraged because I haven’t heard any of them say that it is not going to work, we are not interested. I have heard concerns but not it is not going to work we are not interested. That encourages me because we can work together.

Billionaire Tomorrow: How far away is Africa from having one bank to run this whole thing.

Wamkele Mene: There is already a directive from assembled heads of state that within a certain period of time that we should have one African central bank. A bank for reconstruction and development all this finance related economic related institutions, but of course these instruments have to be ratified by governments and it is taking some time for the ratifications to come through. It is difficult to set a time frame to it. What we have learned is that political will you can achieve some of these things that appear like grand visions that will never happen. This agreement was ratified in a year and two months the fastest ratification in the history of the African Union. So, I think it is possible we have demonstrated that these big visions are possible if we work hard enough towards them.

Billionaire Tomorrow: What difference is the free trade area going to make to the entrepreneurs of the continent. What impact will they see over the next six months to a year?

Wamkele Mene: Six months to a year may be too soon. If you are a trader you have to have a year to two years to establish yourself a new supply chain in the market and then you enjoy the preferences. So, if you are not yet in that new market it will take some time…But if you are an existing trader and an existing investor there are a number of things that are due to you. Firstly, if you exporting goods you will be able to sell into this AfCFTA market at a significantly reduced duty – that makes you more competitive against goods that are coming in from other parts of the world…This new set of rules will make trade on the continent more efficient, cheaper easily accessible not only to the big corporation but also to the small and medium enterprises . If you look for example the biggest contributor of Africa’s GDP is the informal sector the small and medium enterprises, the big challenge is how do we get them to be part of this agreement? So, if you are small and medium enterprise how do you access the market in Morocco. So, we not only have to open the market, which we have done, we have to create platforms for that small business in Malawi to connect with Morocco. We are not able to do this with digital platforms…. The more efficient digital platforms are on the continent, the more efficient trade is on the continent and better for the consumer…There will be benefits it may take some time two to three years, but the benefits will be there.

Remember, people were asking the same question in 1947. Why should we be in a steel pact with just seven of us what are the benefits? Why? So, you have got to start somewhere.

Billionaire Tomorrow: As you know entrepreneurs in Africa have been hammered by COVID-19. Many have gone out of business; millions of jobs have been lost what message of hope could you give to entrepreneurs at the dawn of the new trading bloc on the continent?

Wamkele Mene: If we are able to have trade finance facilities that will really open new opportunities for entrepreneurs that I consider to be a success. If we could establish a AfCFTA fund for trade finance so that entrepreneurs can have access to these new markets I am talking about that could be a success because the drivers of trade and economic growth are the private sector – it is the entrepreneurs. It is not me the trade diplomats, no the people who negotiated this agreement. The drivers are entrepreneur, investors small and medium enterprises and the pan African multinational corporations where we should be focusing our energies to make this work that is where the investment will come from. So, we are already exploring possibilities for how do we establish an AfCFTA fund to mobilise resources for entrepreneurs who want to make this a living agreement by tapping into the new markets.

It is going to be difficult to do this. It is not going to be easy, but I don’t see why we shouldn’t try I don’t see why we should accept the status quo. I don’t see why we shouldn’t go to capital markets and say we are establishing an AfCFTA fund for entrepreneurs are you interested in investing in it? We will establish a board of directors and the appropriate corporate governance for the fund but the whole objective would be to match entrepreneurs and match investment with a market that is open. I have just come from Benin, if you are an investor or an entrepreneur and you are interested in investing in capital machinery for the processing of cotton in this fund you should be able to come to the fund and say this is what I am interested in investing: productive sector investing agro- processing, objectives of the AfCFTA, this is how much capital I require. This is my vision for this fund. This is what I think it should do. We have now laid out the legal framework for open markets on the continent. What we need as a second step is productive sector investment, investing in Africa’s manufacturing capacity, investing in the services sector in the African continent and there are many opportunities that we can collectively look at.

Billionaire Tomorrow: How far away is Africa from having one bank to run this whole thing.

Wamkele Mene: There is already a directive from assembled heads of state that within a certain period of time that we should have one African central bank. A bank for reconstruction and development all this finance related economic related institutions, but of course these instruments have to be ratified by governments and it is taking some time for the ratifications to come through. It is difficult to set a time frame to it. What we have learned is that political will you can achieve some of these things that appear like grand visions that will never happen. This agreement was ratified in a year and two months the fastest ratification in the history of the African Union. So, I think it is possible we have demonstrated that these big visions are possible if we work hard enough towards them.

Billionaire Tomorrow: What difference is the free trade area going to make to the entrepreneurs of the continent. What impact will they see over the next six months to a year?

Wamkele Mene: Six months to a year may be too soon. If you are a trader you have to have a year to two years to establish yourself a new supply chain in the market and then you enjoy the preferences. So, if you are not yet in that new market it will take some time…But if you are an existing trader and an existing investor there are a number of things that are due to you. Firstly, if you exporting goods you will be able to sell into this AfCFTA market at a significantly reduced duty – that makes you more competitive against goods that are coming in from other parts of the world…This new set of rules will make trade on the continent more efficient, cheaper easily accessible not only to the big corporation but also to the small and medium enterprises . If you look for example the biggest contributor of Africa’s GDP is the informal sector the small and medium enterprises, the big challenge is how do we get them to be part of this agreement? So, if you are small and medium enterprise how do you access the market in Morocco. So, we not only have to open the market, which we have done, we have to create platforms for that small business in Malawi to connect with Morocco. We are not able to do this with digital platforms…. The more efficient digital platforms are on the continent, the more efficient trade is on the continent and better for the consumer…There will be benefits it may take some time two to three years, but the benefits will be there.

Remember, people were asking the same question in 1947. Why should we be in a steel pact with just seven of us what are the benefits? Why? So, you have got to start somewhere.

Billionaire Tomorrow: As you know entrepreneurs in Africa have been hammered by COVID-19. Many have gone out of business; millions of jobs have been lost what message of hope could you give to entrepreneurs at the dawn of the new trading bloc on the continent?

Wamkele Mene: If we are able to have trade finance facilities that will really open new opportunities for entrepreneurs that I consider to be a success. If we could establish a AfCFTA fund for trade finance so that entrepreneurs can have access to these new markets I am talking about that could be a success because the drivers of trade and economic growth are the private sector – it is the entrepreneurs. It is not me the trade diplomats, no the people who negotiated this agreement. The drivers are entrepreneur, investors small and medium enterprises and the pan African multinational corporations where we should be focusing our energies to make this work that is where the investment will come from. S0, we are already exploring possibilities for how do we establish an AfCFTA fund to mobilise resources for entrepreneurs who want to make this a living agreement by tapping into the new markets.

It is going to be difficult to do this. It is not going to be easy, but I don’t see why we shouldn’t try I don’t see why we should accept the status quo. I don’t see why we shouldn’t go to capital markets and say we are establishing an AfCFTA fund for entrepreneurs are you interested in investing in it? We will establish a board of directors and the appropriate corporate governance for the fund but the whole objective would be to match entrepreneurs and match investment with a market that is open. I have just come from Benin, if you are an investor or an entrepreneur and you are interested in investing in capital machinery for the processing of cotton in this fund you should be able to come to the fund and say this is what I am interested in investing: productive sector investing agro- processing, objectives of the AfCFTA, this is how much capital I require. This is my vision for this fund. This is what I think it should do. We have now laid out the legal framework for open markets on the continent. What we need as a second step is productive sector investment, investing in Africa’s manufacturing capacity, investing in the services sector in the African continent and there are many opportunities that we can collectively look at.