Trade pact to help Kenya, African states turn youth bulge into dividend

Wamkele Mene and Benedict Oramah

The African Continental Free Trade Area (AfCFTA) Secretary-General Wamkele Mene (left) and the Africa Export Import Bank (Afreximbank) president Prof Benedict Oramah (right) at a past event.


 

Photo credit: Pool

What you need to know:

  • Kenya was the first country in the eastern Africa region to ratify the trade deal after the National Assembly adopted it.
  • Afreximbank is partnering with the International Trade Centre (ITC) to train small business owners and young entrepreneurs in Africa.

The full implementation of Africa's free trade area will help Kenya and other African countries to tap the record number of young people in the continent today to unlock fast economic growth in many countries, the Africa Export Import Bank (Afreximbank) says.

Afreximbank president Benedict Oramah says the speedy implementation of the African Continental Free Trade Area (AfCFTA) is an opportunity to turn the youth bulge into a dividend.

Kenya, which is also grappling with a youth bulge like many African countries was the first country in the eastern Africa region to ratify the trade deal after the National Assembly adopted it.

"Sprouting everywhere in a fragmented continent, the African youth are poised to make giant strides in a single continental market and could seamlessly become the drivers of Africa’s integration and intra-African trade," said Professor Oramah in a statement.

"Policies that give them intellectual property protection, ease the cost of doing business as well as improve access to the single African market will unleash their entrepreneurial drive. A vibrant single market will open a new vista of opportunities that will broaden the choices available to the youth and empower them to reach their potential."

The pan-African free trade zone aims to bring 1.3 billion people together in a USD3.4 trillion (Sh384 trillion) economic bloc that supporters say will boost living standards, encourage development and make Africa less dependent on trade with other regions.

Member states of the AfCFTA recently concluded their negotiations on rules of origin, a move expected to significantly cut tariffs on goods moving within the continent.

Prof Oramah said pacts on youth in the trade agreement should capitalise their creative energies to boost economic opportunities.

"Whether a youth-powered AfCFTA will trigger a continental economic explosion or whether the next decades will become “Lost Decades” for Africa will depend on how we creatively deploy the energies and talents of the continent’s youth to implement the African Continental Free Trade Agreement," said Prof Oramah. 

"We are happy that a Protocol on the Youth will be negotiated under the AfCFTA. That will provide a great opportunity to formalise the integration of the Youth into the continent-wide agenda."

Trading under AfCFTA was to start officially on January 1, 2021, but it could not be implemented as problems regarding rules of origin remained unresolved, making it difficult to identify products that could enjoy the preferential tariff regime under the agreement.

The alternative to a youth dividend is a youth bulge, which is characterized by high youth unemployment and widespread protests — a recipe for political instability, analysts say.

"Africa finds itself at the exact same spot as the US and Canada in the 1900s and Developing Asia in the 70s, 80s and 90s," Prof Oramah said. 

"Today 85 per cent of the continent's population is under 45, and 45 percent are between 15 and 45 years old. This asset in our hands is perhaps the greatest resource, an asset much more valuable than all the oil and mineral resources. The African youth are beginning to make significant contributions to economic transformation across the continent."

Frustrated by the lack of opportunities, many of Africa’s young people are risking their lives on perilous journeys in search of a better life in Europe. Pools of idle youth are a magnet for recruiters from rebel or extremist groups, analysts say.

Prof Oramah said rollout of the regional trade pact will enable governments invest in projects that create jobs or enable youth to start their own businesses.

Afreximbank is partnering with the International Trade Centre (ITC) to train small business owners and young entrepreneurs in Africa to trade with other African countries as part of the new African Continental Free Trade Area (AfCFTA), Prof Oramah said adding that Africa can ride on ICT tools to deliver job opportunities for youth when the pact is fully rolled out.

"As the youth are technology savvy, and we believe that it is technology that will bring down the borders that divide us, the Digital AfCFTA dubbed the African Trade Gateway being developed in collaboration with the AfCFTA Secretariat offers a window for market Access, cross-border payment through PAPSS, (Payments and Settlement System) Customer Due Diligence, and e-logistics services, among others," said Prof Oramah. 

"We have also launched an SME Development programme that will target the youth for training, access to markets and access to finance."