For the African Continental Free Trade Area (AfCFTA) to succeed and help in the integration of Africa, African countries will have to take value chains seriously and promote them across the continent. This was one of the major issues that dominated the first day of the African Capacity Building Foundation’s 9th Africa Think Tank Summit in Lusaka, Zambia.
Leading the call for value chains, in a discussion under the topic, “Addressing the evolving challenges of AfCFTA implementation and imperatives for actions”, Mr Charles Chiza Chiumya, the African Union’s Acting Director for Industry, Minerals, Entrepreneurship and Tourism, said Africa could effectively integrate and produce goods and services for the people of the continent by promoting value chains.
“That is why the African Union is promoting value chains,” Mr Chiumya said. “Gone are the days when you produced only for your domestic market. Now the AfCFTA is saying you can produce for more markets beyond your domestic market.”
He cited the example of baby food which Africa imports at a cost of US$600m a year, and pointed out that the continent produces all the ingredients that go into baby food – “basically milk and groundnuts or soya beans,” Mr Chiumya said. “But we spend US$600m a year just to import baby food when we have all the ingredients on the continent to produce it. We export the ingredients as raw material, they make baby food for us, and we import it at higher prices.”
This can only be avoided if the continent promotes value chains, Mr Chiumya said, pointing out that Zambia may have soya beans or groundnuts and its neighbour Malawi may have milk. “So why can’t they come together and produce baby food and take the US$600m market? This is what is going to bring the promise of the AfCFTA that we are talking about,”
Mr Chiumya cited another example, saying Zambia and DRCongo can come together and produce electric batteries for electric cars, “because all the ingredients, whether copper, cobalt, graphite, or lithium are here in this region. So why are we not producing electric batteries?
He said the automotive industry was one of the areas highlighted under the AfCFTA, followed by fintech, textiles, and tourism. “We have the capability to make a bigger mark through the AfCFTA.”
Mr Chiumya drew attention to the Africa Trade Observatory, a digital tool created by the AU that enables the continent to see how it is doing trade-wise.
Under the Africa Trade Observatory, the AU has been building partnerships among member countries and organisations such as the Afreximbank.
Turning to startups, Mr Chiumya said there were many startups coming up especially for the youth and women but most African countries do not have laws regulating startups. So, the AU has developed a model which member countries can use to ensure that their youths are able to innovate.
Mr Chiumya’s take on startups became the opener for Prof Alex Ariho, the CEO of the African Agribusiness Incubators Network (AAIN), which brings together incubators, accelerators, and enterprise support organisations in 48 of Africa’s 55 countries.
According to him, Africa invests a lot in infrastructure and trade negotiations, “but no investment is done to groom emerging startups and SMEs in the ecosystem to boost our economies,” Prof Ariho said.
“Subsequently 60% to 70% of the SMEs and startups that begin business in Africa fail by the second year because we are not providing an enabling ecosystem to allow the startups to gain competent skills and build capacity to be competitive. This is why our network of incubators are cooperating and building partnerships in Africa to advance business incubations and capacity development,” Prof Ariho added.
He said the continent needed market-driven research. “For us to have results, we need to be realistic and invest in research, evidence-based data. If we expect different results, we need to do things differently,” Prof Ariho concluded.
Expanding the discussion on startups, Mr Isaac Mwaipopo, the Executive Director of the Centre for Trade Policy Development of Zambia, advocated for mentorship to be provided to startups to network. “We need to be doing this much more deliberately to make it effective,” he said, and called on African leaders to include startup owners on their travels so they can see what is going on elsewhere.
Mr Mwaipopo also advocated for border markets in the implementation of the AfCFTA. “This doesn’t require much money, so let all the countries or regional economic communities establish border market zones where cross-border traders will come to transact,” Mr Mwaipopo urged African nations.
“There must be banking facilities at the border markets so that there is safety,” Mr Mwaipopo continued. “All the government agencies that are required to be there must be there. There is an example of such a border market between Nigeria and Benin called Okereke Market. It functions very well. Huge transactions take place there. And there is a particular day when it is free trade, so customs doesn’t interfere. The traders come and they transact. This is what the AfCFTA should encourage on the continent.”