According to local media reports, the newly elected Secretary-General of the African Continental Free Trade Agreement (AfCFTA) secretariat, Wamkele Mene, revealed that the implementation of the AfCFTA agreement will not begin on July 1st, 2020 as planned due to disruptions caused by the global pandemic. We recall the agreement which entered its operational phase on July 7, 2019, was expected to kick start in July 2020, following the ratification by 54 of all 55 African countries.
It was also reported that the AU summit which was scheduled to hold in South Africa on 30th May to encourage trade negotiators to complete their bargaining on tariff reductions, rules of origin, and other necessary regulations has been postponed.
The AfCFTA agreement, which is aimed at removing trade barriers and in turn boosting intra-Africa trade, was brokered by African Union (AU) and signed on by 44 of its 55 member states in Kigali, Rwanda on March 21, 2018. President Muhammadu Buhari, in July 2019, after initially withdrawing assent, signed the agreement at the 12th Extraordinary Session of the Assembly of the African Union in the Niger Republic.
The agreement requires members to remove tariffs from 90% of goods traded, allowing free access to commodities, goods, and services across the continent. According to International Monetary Fund (IMF), the elimination of tariffs could boost trade in Africa by 15-25% in the medium term. Once operational, the agreement is expected to create a US$3.4 trillion economic bloc, connecting 1.3 billion people across Africa, which would make it the largest trading bloc since the World Trade Organization was formed in 1994.
Specifically for Nigeria, the agreement was expected to open up the African market for key manufacturing companies in the country to support export sales whilst also raising the prospects of attracting foreign direct investment across the value chain and different compartments in the manufacturing sector.
Although the delay in implementation implies these benefits will not be seen in the short to medium term, we think it gives the country ample time to accelerate investment in critical infrastructure that will reduce the cost of producing goods locally and improve the competitiveness of local manufacturers.
In our view, African countries with the requisite infrastructure needed for large scale manufacturing activities will be better placed to attract foreign capital from multinational companies who are seeking to establish manufacturing hubs into Africa to take advantage of economies of scale as well as the benefit associated with the absence of regional taxes made possible by AfCFTA.
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Insecurity: FG to implement town hall meetings to reach a national consensus
The meetings are set to address the twin issues of insecurity and its concomitant effect on national unity and cohesion.
The Federal Government announced the launch of town hall meetings to address the twin issues of insecurity and its concomitant effect on national unity and cohesion.
This was disclosed by the Minister of Information, Lai Mohammed, at the Town Hall Meeting in Kaduna on Thursday, themed “Setting Benchmarks for Enhanced Security and National Unity in Nigeria.”
What the Minister is saying
“The correct starting point towards addressing these myriads of problems is the building of an “elite consensus” on the security, unity, indissolubility, and peaceful existence of Nigeria.
“Such elite consensus had worked in the past. Can we make it work now and proffer solutions in order to stave off the threats to our unity as a nation?” he said.
The Minister disclosed that the meetings are necessary to bring all critical stakeholders together to deliberate on the issues and possibly reach a consensus on the way forward.
“We expect this Town Hall meeting to develop concrete, implementable resolutions because a lot of talks and postulations had taken place with little or no requisite outcome.”
In case you missed it
- Former Vice President, Atiku Abubakar warned that the rising insecurity in Nigeria is a result of rising youth unemployment. He urged Nigeria to tackle out-of-school children cases, pay a monthly stipend to poorer families, incorporate youths who are above school age into massive public works programmes and others.
- Senator Ali Ndume insisted that the Federal Government needs to increase its total military spending to be able to tackle the rising insecurity in Nigeria which has seen a number of school students in 2021 kidnapped by bandits.
IMF lifts 2021 global GDP growth to 6%
The group also warned that economic recoveries are diverging dangerously across and within countries.
The International Monetary Fund has lifted its global growth outlook to 6% in 2021 (0.5% point upgrade) and 4.4% in 2022 (0.2 percentage point upgrade), after an estimated historic contraction of -3.3% in 2020 due to the effects of the COVID-19 pandemic. This disclosure was made on the organisation’s website on Tuesday.
The group also warned that economic recoveries are diverging dangerously across and within countries, as economies with slower vaccine rollout, more limited policy support, and more reliance on tourism do less well.
What the IMF is saying
“The upgrades in global growth for 2021 and 2022 are mainly due to upgrades for advanced economies, particularly to a sizeable upgrade for the United States (1.3 percentage points) that is expected to grow at 6.4 percent this year.
This makes the United States the only large economy projected to surpass the level of GDP it was forecast to have in 2022 in the absence of this pandemic.
China is projected to grow this year at 8.4 percent. While China’s economy had already returned to pre-pandemic GDP in 2020, many other countries are not expected to do so until 2023.”
On divergent recoveries
The IMF stated that divergent recovery paths are likely to create wider gaps in living standards across countries compared to pre-pandemic expectations.
“The average annual loss in per capita GDP over 2020–24, relative to pre-pandemic forecasts, is projected to be 5.7 percent in low-income countries and 4.7 percent in emerging markets, while in advanced economies the losses are expected to be smaller at 2.3 percent,” they said.
“Faster progress with vaccinations can uplift the forecast, while a more prolonged pandemic with virus variants that evade vaccines can lead to a sharp downgrade. Multispeed recoveries could pose financial risks if interest rates in the United States rise further in unexpected ways.“
For Africa, IMF forecasts economic growth of 3.4% in 2021 and 4% by 2022, Nigeria is expected to grow by 2.5% in 2021 and 2.3% by 2022, while South Africa is projected to hit growths of 3.1% and 2.0% for the respective years in focus.
In case you missed it
The International Monetary Fund (IMF) identified some factors that hamper the economic recovery of low-income countries from the devastating impact of the coronavirus pandemic, factors including access to vaccines, limited policy space to respond to the crisis, the lack of means for extra spending, pre-existing vulnerabilities such as high levels of public debt in many low-income countries and sometimes weak, negative, total factor productivity performance in some low-income countries. These factors continue to act as a drag on growth.
Nairametrics | Company Earnings
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