UN Report: Trade pact to help Kenya, other African states out of economic crisis
Dr Hanan Morsy, the deputy executive secretary and chief economist at UN Economic Commission for Africa. The commission says full implementation of Africa's free trade area will help regional countries ride out the current global economic turmoil arising from the Russia-Ukraine crisis.
The full implementation of Africa's free trade area will help regional countries ride out the current global economic turmoil arising from the Russia-Ukraine crisis, the UN Economic Commission for Africa (Uneca) now says.
Economic falling-out from the crisis which has disrupted global supply lines in Kenya and other African states, is driving food and energy prices higher and putting the most vulnerable people in the continent at risk of hunger, several reports show.
But the newly published report by Uneca says the speedy implementation of the African Continental Free Trade Area (AfCFTA) is an opportunity "to build forward better" and create resilience within African countries.
Intra-Africa trade
“If AfCFTA is effectively implemented, intra-Africa trade is expected to be about 35 per cent higher than without the grouping by 2045,” says the Uneca report
“The AfCFTA would help Africa industrialise and diversify, reducing trade dependence on external partners and boosting the share of intra-Africa trade from roughly 15 per cent today to over 26 per cent.”
Kenya, which is also grappling with the effects of the Russia-Ukraine war, was the first country in the eastern Africa region to ratify the trade deal after the National Assembly adopted it.
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.
Cut tariffs on goods
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.
Most African countries still depend on exports of raw materials and on imports of essential goods such as food items and pharmaceuticals.
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 Uneca report titled: ‘Addressing Poverty and Vulnerability in Africa during the Covid-19 Pandemic’, shows that the pandemic caused job losses, reduced income and further limited the ability of households to manage risks.
An estimated 12.6 per cent more people are likely to be pushed into poverty in one year alone more than the combined total of the additional poor since 1999, says the report.
People in extreme poverty
“Under current projections, the pandemic is likely to increase the number of people living in extreme poverty, in Africa and globally,” says the report.
The report was produced by ECA’s Strategic Planning, Oversight and Results Division, the Gender, Poverty and Social Policy Division and the Macroeconomic and Governance Division.
Hanan Morsy, ECA’s deputy executive secretary, said the report analyses the implication of Covid-19 in terms of poverty, but brings a new dimension stressing the vulnerability in Africa.
“This report is particularly relevant given what we have seen as the implications on the continent. The most critical implication of Covid-19 has been the reversal of the very hard-won gains that the continent had managed to achieve in reducing poverty,” said Dr Morsy who is also the chief economist of the Uneca.
