Signatory Framework Agreement Made Easy

Signatory framework agreement

open for business one of the world's biggest free trade zones has now come into effect in africa but many argue the continent lacks proper infrastructure to implement the agreement so is africa ready for the free movement of goods and people this is inside story hello and welcome to the program i'm peter dobby a new year and a new start for africa the world's largest single market has now opened enabling all but one of the 54 nations to begin trading the african continental free trade area is a landmark deal bringing together the continent's multi-trillion dollar economy into one block it's the culmination of years of work negotiations and delays and while only 33 of these signatories have put the deal into effect it's already being heralded as a turning point for africa's economic future ahmed idris reports workers at this garment factory rushed to deliver thousands of face masks the owner says more than two and a half million were met here to help nigeria control the spread of covet-19 but as the africa free trade agreement comes into effect he foresees trouble ahead for the continent's poorer countries small and poor economies will always be at a disadvantage hopefully as time goes on we can get special considerations otherwise it will be difficult to compete businesses in poor countries may have their concerns but overall experts say the agreement will eventually benefit them they believe the cheap cost of labor in these countries will attract more industries into african trade can spur industrial development the level and pace of industrialization among african countries vary some will have advantage over others but african countries need to buy and sell raw and finished products among themselves landlocked tunisia currently imports most of its needs from bottled water to food and machinery from big retail to local markets nigeria is flooded with imported products because of its weak infrastructure and industrial base the country will continue to depend on imports making it difficult for local industries to grow experts say it's hard to see european and asian multinational companies giving up the trade advantage they've held in africa for a century products from europe asia and africa's larger economies lined the shelves at nyami's biggest retail monopoly consumers prefer these brands traders say there won't be many local goods on store shelves unless government steps in we should be given support government should facilitate easy acquisition of land and loans from banks but it's hard to see how governments on the continent can do that without breaching the protectionism rules of africa trade agreement and the world trade organization ahmed idris al jazeera now we have a panel of experts standing by but first let's break down the numbers behind the deal well under the agreement tariffs will be eliminated on 90 of goods that means in a market of 1.3 billion people with a combined gdp of 2.5 trillion dollars trading will be nearly duty-free the world bank says that will increase the continent's income by 450 billion dollars in the next 15 years the bank also says africa's exports mostly in manufacturing will get a 560 billion dollar boost and the agreement will raise wages especially for women who account for more than 70 percent of cross-border traders and the free trade agreement promises to lift 30 million africans out of extreme poverty okay let's bring in our panel today in nairobi we have david o'ero he's the founder of the africa development think tank in london we have paul melle he's a consulting fellow at chatham house and in johannesburg we have the economist shanti payee he's a columnist business day and the financial male gentleman welcome to you all david in nairobi can i come to you first for the countries who've signed up to this what does this in theory mean for them well uh on the one hand uh you've got a big opportunity not only to bolster your inter-african exports and imports but as well as an opportunity to achieve your economic development goals of employment uh for the reason that most of what is traded within africa is actually uh originating from africa and so these tend to be africa's value add in manufacturing sectors um and so there's a huge potential for not only creating greater employment opportunities but also increasing incomes as you uh you specialize and you generate greater value add in your up your value chain paul melly in london lots of people are saying look this means good or better infrastructure but for some of the signatory countries they don't have an infrastructure to speak of to start with anyway no that's certainly true particularly in the central african region i think it's really striking when you look at the map that west africa is relatively integrated eastern africa has quite a high degree of integration the same for southern africa but then right in the center of the continent is that huge congo basin region where um the development of long distance roads it is only really getting underway now linking uh the member countries for example of the central african block and where there are very few rail connections and so the movement of goods from one part of the continent to another won't be quite as straightforward and so i suspect that at the start of this process we're really going to see perhaps a bit of an acceleration of integration and trading growth within the existing regions that are already more integrated so in east west and south but that in the centre of the continent it will take longer for those countries to really begin to reap the benefits because their infrastructure is so thin shantipai in johannesburg this also should mean a lot of external investment there is already in certain of the african countries a lot of external investment to the point of economic critics of certain external countries might say there's too much because if you've got so much money being poured into an economy it can skew the economy and if that country is in in effect in debt to trillions of u.s dollars the economy is not coming back in the way it's going out the way to the country that's doing the investing and that's absolutely true and i think we've seen it also in particular um that actually also um does not foster diversification of these economies and so you actually find that you know you only have a mining economy or an agricultural economy and that actually makes it very difficult then to create to get the kinds of gains that you want to actually get from a much more industrialized and exporting kind of country because obviously um that if you are focused in particular areas and therefore you don't for example develop the skills um if you think about the central african region in particular where there's a lot of mining and of course agriculture that that stays primary in terms of the way it has been developed and it does not grow into actually being able to be actually much more advanced so that you can actually um you know add the value and then export into the rest of the continent and actually have then the other industries that will spring out of that and i think one of the things that we really have to focus on is exactly that sort of thing and i think one of the interesting things about that of course is that while we are actually talking about that investment that has been coming in and i think this is something that people have complained about in fact about china is that you have investment that is also followed by labor all these kinds of skills that actually come in together than developing local skills because we don't just want you know the movement of goods but it has to be also the creation of skills creation of jobs and the upliftment of you know people's basic incomes and so this has to actually be something that has to be paid um extra attention to uh in terms of trade but i think that is one of the key things that um have to be actually developed and i suspect the office um that has been is being developed after secretariat is going to be um quite central in actually trying to make sure that those things happen but we know that this investment thing has been a problem particularly for the african union where even funding african union programs has been very difficult from infrastructure issues of infrastructure to peacekeeping all of these things have been quite problematic and one actually has to focus on those things otherwise they are actually going to continue along the same path david aguero in nairobi there is also surely on the part of the people who are driving this there is an economic assumption that the fundamentals of every signatory country are basically sound but they are not you know and does that explain say for example why nigeria wasn't particularly keen on this idea of a free trading zone encompassing all of the african countries because the reality is five six months ago on this show we were discussing how nigeria was heading towards bankruptcy and it needed to borrow money from people not in africa yes certainly um it warrants for analysts and keen observers of these affairs in africa to also think about the political uh implications that you know the continental treaty area brings about with them and certainly the hesitance that we saw from nigeria perhaps provide insight to that i know there was a lot of debate and discussion around you know the the small economies and the accent to which they would lose out particularly if you look at west africa where nigeria you know sort of dominates uh those economies there and actually is a key partner to almost all the west african uh a large majority of the west african states you would see that you know there are certainly a trade creation and trade diversion effects that would result uh you know in an open continent-wide trading arrangement but certainly i think uh to the broader question uh you know uh the the aspect or the whole ambition behind the continental freighter area really lies in the uh motive of uh erasing or harmonizing rather the customs procedures and the addressing the trade barriers that have existed on the continent much as we have uh indeed you know very different configurations and very unique economies there is an argument to be made that you know trade barriers are often largely stored in the way of not only trading but also achieving the economic development that individual countries aspire to and so if you take this as just one of the mechanisms by which economies can actually provide a way out for the economies to scale that development ladder certainly it is a welcome idea in johannesburg how can we achieve a situation where we have that harmonization there that we're hearing about as a go-to requirement if and this is happening as we speak there are certain borders that are closed because of conflict slash and or corruption between different countries governments there are not wars going on across africa but there are conflicts going on all over africa and i think this has been a fundamental problem because i think obviously um you know the whole idea that you wanted to silence the guns was also i guess to try and actually move towards development but i think you know one of the interesting things actually as we have been talking about conflicts and you know this invisible war against covet that has also highlighted some of the problems that we continue to face just a few days ago here you know in the border between south africa and zimbabwe um we you know we had the big major problems actually of people passing through and goods passing through because obviously of the kinds of um limitations that were put there uh in terms of our people passing through and between the two governments it became nearly impossible to save people's lives i mean shark drivers died on that border and that tells us something about how it is that we're actually going to be able to actually think about um you know how to actually manage crisis uh between uh you know within countries and then of course the idea that we actually want to be able to create the kind of um smooth trade environment that um would allow us to go so you know suddenly you know the requirements could not be met with you know you wanted the kind of testing so you know that that very easy seamless kind of discussion and actually planning that is necessary to be done by two countries that are relatively have had long trade relations you find that you know as a a crisis like you know covet has not been if has actually created a major situation in which actually goods and people could not move through at that area and these are things that actually have to be expected and actually plan for because if we don't do that then actually we are going to find that actually then you know we went that way down trust of the investment because we don't want to obviously bring an investment to actually invest in these countries and within countries where you can develop at the sector and then the trade itself does not happen because actually the kind of work that's necessary for trade to happen hasn't been done and i think it's been very disappointing given that kind of work that should have been done a long time ago if we actually are serious about the kind of trade that we want to do uh especially when there is already an established straight relationship paul melly in london there's a lot of that coming down to being serious about it can also come down to political will because the reality is that an awful lot of african countries that we could talk about are less industrialized today than they were during the 1970s quite a few have lost industry but in a sense that's that's partly because of the evolution of the global economy towards a more high-tech basis and away from some of the old heavy industries that were experimented with in africa in the immediate period after independence in a few countries but on the whole the technological evolution of the world economy has actually helped africa if one thinks of the mobile phone sector for example many countries never really developed a very strong um fixed line network but with um mobile telecoms and all that's associated with it and fiber optic and so on the whole process has leaked forward hugely and now you you there are countries where you can be in quite remote rural areas and yet have uh 4g access and then that facilitates um new economic activities new forms of business and trading but i think another key point is just this question of simplifying and reducing the administrative hassles and uh bureaucratic burdens that you find at borders because every country not just in africa any country in the world obviously there's domestic political pressure if you like to look after domestic interests and that can sometimes foster the development of barriers at uh at borders but when those barriers are able to be reduced through administrative reform and through cross-border negotiation then it makes it easier to encourage not just more trade but more high quality trade and we can see this for example in west africa that we're now beginning to see plans for the revival of car assembly plants probably in ghana and nigeria and because the borders the trade barriers are going to be reduced at the borders or are being reduced it's possible to develop car plants that will be serving the west african region as a whole and similarly in west africa the region grows a lot of cotton and most people wear cotton clothes and yet at the moment the textile industry is very thin and uh struggles to compete against chinese competition but we're beginning to see one or two pointers to new investment in modern textile plants that could be internationally competitive so that west africans can grow the cotton that is then transformed locally into clothes for that local market david i mean if we're talking about anything or areas of industry as diverse as car manufacturing and also the cotton industry on the plus side i guess that means people have jobs but on the negative side is there potential here for the financial benefits to be generated in africa but to flow out of the african countries that are already taking steps in that direction because that's why for example post-brexit uk government trade ministers are already talking to some of the african countries because they're thinking we can access low labor cost markets that in theory are built on lots of movement of industry infrastructure and people and the reality of dealing with those companies in that environment might be completely different to what it should be on paper yes uh you've got from the head uh again um as you know my south african colleague and also what you've just provided now provides the context uh to the larger picture that really uh you know a trade regulation a trade uh trading framework really is not the end-all be-all of uh you know addressing uh all our key economic challenges um and so the example that you give that you know even if we do have this uh trading framework in place it still doesn't address the greater uh challenges that are posed uh um or brought about by the existing financial architecture of the globe that we have right now and the reality is that africa is indeed losing a lot uh you know some studies have estimated over 500 billion annually u.s dollars that africa loses just because of the way the financial architecture is and so that's not to say that we now don't implement you know appropriate trade policies that could result in economic development for our countries but really the question is can we put this can we as we address the trade questions also address other related significant policies that should be implemented or to be implemented in concert with this uh such as to do with how uh our regulations uh that govern uh the financial architecture uh that impacts africa uh you know as a key question and also the other aspects that relate to issues of uh you know inclusiveness in terms of a kind of employment opportunities for women for youth and so forth that should ought to come about um and so these are all questions that are important that we we shouldn't forget and and that's why coming together from a you know continental perspective is important because not only will we be able to put in place a trade policy but also uh strategize and harmonize our sector policies uh that's ought to be implemented in concert without a policy and the key example here is we cannot be implementing infrastructure programs that are incoherent even within the african sub-regions so the example is yeah go ahead okay shanti pai in johannesburg is it possible within this free trade agreement or free trade zone as it now is as of today to codify what david were in nairobi is talking about there to codify that women get proper representation in the workplace that they get paid the same as the equivalent men that the crucial employment category into when it comes to age you know like the 18 to 34 year olds that they're in the proper jobs especially given that some analysts are already calling this empire 2 because all those colonial powers that gave countries back literally after the second world war and then walked away 80 percent walked away some of those colonial powers undoubtedly the french for example will be looking in and going oh well maybe we can start building renaults and citroens in west africa as the nigerian economy pivots from oil and gas towards something else and that's absolutely true and i think one of the things that you're absolutely going to get against i think one of the interesting things is that also i mean you know when we mentioned some of the negative things one of the things that you've seen over a period of time is that of course you know this idea of comparative advantage is one key area that you have to look at we know for example in south africa the education system and the school system is very very poor for the majority but we know that you know there are many other countries on the continent that have been very good in education and literacy in mathematics and science but then have not had the industry and south africa developed industry by a period of time and one thinks that one of the things one can do is of course is to transfer some of that so when south african companies actually can transfer some of that industrial prowess into uh you know for example into the central african region where we know um there's been a lot of you know the french education perhaps all those kinds of standards of education and one of those things that we can meet them together and i see a lot of opportunities where actually you know in the agricultural system in south africa that's been very successful that's very very industrialized how do we actually transfer some of that skill so one of the things we have to absolutely do is actually make sure that these transfers actually happen whether it's and particularly so that we can actually build on the technologies built on the industry actually and also use some of our already seeded uh kind of skills development that has already happened on the continent and i think one of the things that of course one has to cut against is that very idea of i guess what people call the second scramble for africa and then actually use some of the investment i don't think that it is now possible um to actually do development on the continent without of course external funding but one has to then say within this environment how do we actually make okay that we are not going to re-export last word to paul very briefly paul we've got 60 seconds for you to answer this question how and when do we know that this has been a success given that especially the continent of africa has 17 of the global workforce but it only produces three percent of the global gdp i think we'll know if it is becoming a success if little by little we see that uh ratio beginning to shift because africa starts providing value-added i mean to take issue with your point about renault and citroen coming in at the moment the point is the renaults the citroens the volkswagens they're coming in toyotas they're all coming in anyway if you stand on the keysight at any west african port you can see the car carrying ships importing all these vehicles it's not that nobody has cars and wouldn't it be better if some of those cars are at least assembled in the west african region and therefore employing people and with appropriate skills training and it building up the value added i mean why should uh cote d'ivoire organa always only produce coco why can't they produce chocolate and you can apply that in sectors all over the continent so the real test will be if we start to see the value added rising so that africa's share of gdp starts to relate a bit more to its population that means that people's living standards their jobs the range of skills that they can take up and use is gradually on the rise i think that's the indicator to watch okay gentlemen we'll have to leave it there thank you to our guests today they were david aguero paul melli and shanti paii and thank you to you for watching you can see the show again anytime via the website aljazeera.com and for more discussion go to our facebook page that's facebook.com forward slash aj inside story you can also track us on twitter at aj inside story from me peter dobby and the team here in doha thanks for watching we will see you very soon for the moment [Music] bye-bye you