W’Bank Advises Nigeria, Others on AfCFTA’s Implementation

W’Bank Advises Nigeria, Others on AfCFTA’s Implementation

By Dike Onwuamaeze

The World Bank has urged African countries to take concrete actions in order to ensure efficient implementation and administration of the African Continental Free Trade Area (AfCFTA) in order to enable it to flourish and yield maximum benefits to the continent.

The bank also stated that other areas of focus should be the provision of trade-related institutional support for government agencies charged with the implementation of the agreement and the introduction of specific-sector initiatives aimed at enabling domestic firms to transition to free trade.

It said that experience has shown that designing a complementary agenda to maximise the potential benefits of any free trade agreement is important.

The World Bank’s advice was contained in its publication titled, “The Distributional Impacts of Trade: Empirical Innovations, Analytical Tools and Policy Reponses,” that was authored by Jakob Engel, Deeksha Kokas, Gladys Lopez-Acevedo and Maryla Maliszewska.

It said capacity building for AfCFTA’s implementation and administration in the form of training, direct advice, and implementation support would, “benefit not only the ministries of trade but also other key ministries as well as border management agencies (especially customs) tasked with the future implementation of an agreement that they may previously have had only exposure to during the negotiation phase.

“This is essential for compliance, administration and problem solving, economic monitoring and socialisation of the AfCFTA.

“Furthermore, there is a need to strongly engage the private sector and other nongovernmental stakeholders including consumer groups and labor unions in the reform process to better understand the nature of different distortions and potential risks.

“Individuals who interact with the regulatory system daily are likely to better understand and identify what may limit the benefits from trade reforms. Establishing such processes is also essential for maintaining support throughout the many ups and downs of implementation. These lessons are informing the World Bank’s approach to supporting the negotiations and eventual implementation on the AfCFTA.”

The World Bank noted that free trade agreements (FTAs) create significant opportunities but highlighted that experience has shown that maximising their potential benefits would not automatic.

It therefore pointed out that the key issue would be on how the AfCFTA institutions and member states would address weaknesses that have limited the impact of previous regional FTAs in Africa.

The report added: “To a great extent, the possibility that the AfCFTA will become a milestone for development in the region will depend on: the depth and breadth of detailed commitments to remove trade barriers that are to be negotiated; the extent to which the AfCFTA commitments are effectively implemented on the ground, and complementary initiatives that ensure a smooth transition to free trade and induce greater flows of productive investment in nontraditional sectors, leading to more and better jobs.”

The bank said that its engagement with the African Union has been helping the AfCFTA’s stakeholders to gather needed evidence that would enable them to make informed decisions about the negotiation process.

Yet, the bank noted that many member states of the AfCFTA lacked a, “track record on implementing the trade agreements they have signed, will continue to need additional support.”

“The goal of that support is to effectively implement agreements, identify critical domestic bottlenecks, and prioritise actions to ensure a smooth transition to free trade and to attract more investment. It will thus be key to ensuring fairness and a level playing field for traders.”

The Managing Director for Development, Policy and Partnerships of the World Bank Group, Mari E. Pangestu, said it must be clear from the start that relationship between trade and growth is unequivocal as trading nations have created new markets for their goods, increased the productivity of their workers, and gained skills and knowledge from their trading partners.

According to Pangestu, the positive role of trade has led to the global reduction of poverty from 36 per cent to nine per cent between 1990 and 2017 while developing countries increased their share in global exports from 16 to 30 per cent.

He said: “Global trade will play a critical role in driving economic recovery from the COVID-19 pandemic; ensuring the flow of food, medical supplies, and vaccines; and helping to further reduce poverty.

“This makes it all the more important to better understand and communicate the relationship between trade and welfare across populations, as well as its role in reducing global disparities.”

The report advised developing countries to think about adjustment costs and the need to improve distributional outcomes beyond trade-related shocks.

It said: “As exogenous shocks unrelated to trade become more frequent, developing countries will need to continue strengthening their policy apparatus and economic foundations for resilient, competitive, and inclusive societies that can respond effectively to dislocation and adjustment.”

Related Articles