Biennial Lecture and Dialogue of the Brown Capital Management Africa Forum: The African Continental Free Trade Area
On December 14, 2021, the Brown Capital Management Africa Forum hosted the Biennial Lecture and Dialogue of the Brown Capital Management Africa Forum—The African Continental Free Trade Area (AfCFTA): Its Significance and Current State of Play, Challenges and Opportunities, including for U.S.-Africa Economic Relations with Wamkele Mene, Secretary-General of the African Continental Free Trade Area (AfCFTA) Secretariat.
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Ambassador Mark Green, President, Director, and CEO of the Wilson Center provided welcome and opening remarks, highlighting the importance of the AfCFTA for U.S.-Africa economic relations and Africa’s development and recognizing the many years of planning and work that came before the January 2021 commencement of trade under the agreement. He spoke to the agreement’s potential to make Africa the largest free trade area in the world, better facilitating the movement of people, goods, and capital, encouraging and enabling entrepreneurship, connecting vibrant communities with global markets, and promoting African trade and innovation on the global stage—particularly in high-value sectors. Ambassador Green stressed that the AfCFTA’s articulation with existing U.S. programs such as Prosper Africa and the African Growth and Opportunity Act (AGOA) will be crucial in shaping the future of U.S.-African trade and development, in both the public and private sector arenas.
Mr. Eddie C. Brown, Brown Capital Management Founder, Chairman, and CEO, then offered introductory remarks, reiterating the role of the Brown Capital Management Forum as a platform for substantive, policy-oriented dialogue on key issues surrounding U.S.-Africa trade, investment, and sustainable development. He emphasized that Africa does not receive the level of attention it deserves, and that the attention it does receive is often focused on its challenges instead of its opportunities. He stressed that Brown Capital Management, through its partnership with the Wilson Center, is committed to shining a spotlight on Africa’s development—particularly on the opportunities for mutually beneficial U.S.-Africa economic relations. The AfCFTA presents such an opportunity, Mr. Brown concluded, hence its choice as the topic for the inaugural Biennial Lecture and Dialogue on Africa of the Brown Capital Management Africa Forum.
Dr. Monde Muyangwa, Africa Program Director, then introduced the keynote speaker and moderated the event.
Secretary-General Mene’s lecture focused on the significance and current state of play of the AfCFTA’s implementation, key challenges facing the AfCFTA, and key opportunities presented by the agreement, including for the way forward on U.S.-African economic engagement and growth.
The Secretary-General began his address by highlighting damaging effects of entrenched misperceptions and negative attitudes about Africa, including on Africa’s trading potential and COVID-19 recovery, and emphasizing that these negative attitudes are disconnected from an Africa that has been a place of tremendous economic growth and development. The Secretary-General expressed that recent international travel bans on African countries appear to punish countries like South Africa and Botswana, who should instead be congratulated for their role in uncovering the Omicron variant, which he noted had been circulating in several Western countries before the two southern African countries brought it to the world’s attention. He stressed that such bans have a disproportionate, negative impact on Africa’s economic recovery and engagement with the global community—including on its ability to import life-saving medical resources for the fight against COVID-19, and he emphasized the need for global solidarity in combatting the pandemic.
Secretary-General Mene then offered a critique of why Africa continues to perform on the margins of global trade and development. He questioned why, after almost 60 years of independence, Africa has not been as competitive or developed as other regions in the international trade arena despite enormous natural resource wealth. He noted that this was mainly because African countries had sustained, instead of transforming, the colonial economic models focused on exporting a narrow range of primary commodities and importing manufactured goods, thus tying the continent’s economic success to the volatility of global primary commodity markets and preventing its economic integration and successful development. Having provided this backdrop, Secretary-General Mene pivoted to an overview of the current state of play of AfCFTA.
The Current State of Play of the AfCFTA: Secretary-General Mene situated the AfCFTA within the larger umbrella of the African Union’s “Agenda 2063: The Africa We Want,” a blueprint for African transformation and development of which the AfCFTA is a Flagship Program. While acknowledging the difficulty in implementing a free trade agreement among 55 member countries of the African Union, Secretary-General Mene pointed out that the fact that 39 countries have ratified the agreement points to the widespread political will of African leaders for African economic integration and liberalization, and he signaled his confidence that the rest of the remaining countries would ratify in due time. The Secretary-General also highlighted that the AfCFTA is the fastest instrument to be ratified under the African Union since the union’s establishment.
Secretary-General Mene spoke to the extensive work that the AfCFTA had taken in the first phase of implementation, highlighting a few key areas of progress. He noted that the AfCFTA had concluded the protocols on trade in goods and trade in services, and operationalized a fully functional, forward-looking dispute settlement body that has been informed by lessons learned from the successes and failures of other trade dispute settlement mechanisms around the world—a crucial structure in signaling that the African continent is open for business and investment. In addition, the AfCFTA has completed 87% of negotiations on rules of origin, covering a range of productive sectors; identified five areas for immediate liberalization: financial, tourism, transport, communication, and business services; and established a timeline for publishing a clear and transparent AfCFTA tariff book that will be made easily accessible to investors and stakeholders in 2022.
With regard to next steps, the Secretary-General shared that the second phase of implementation would include protocols on the following areas: intellectual property rights, investment protection, competition policy, digital trade, and women and youth in trade.
He then elaborated on one issue related to intellectual property rights which had been brought to the fore by the COVID-19 pandemic: Africa’s large imports of pharmaceutical products and comparatively low manufacturing capacity for pharmaceuticals. He argued for the deployment of an intellectual property rights regime that captures Africa’s desired reforms, and provides and encourages investors while also serving Africa’s public health and industrial development imperatives.
Challenges Facing the AfCFTA: Before discussing key challenges, Secretary-General Mene recalled that it took Europe 72 years to reach the depth of economic integration that we see today. He then acknowledged a few specific difficulties to full implementation of the AfCFTA, including the stark differences in economic development between African countries in terms of GDP, industrial base, and export capacity; the fact that Africa has 42 different currencies in use and the associated high cost of convertibility; and the infrastructure deficits that remain, even with the investments that many African countries have made in this area in recent years.
The Secretary-General discussed the potential solutions in the works for these barriers, including a partnership between the AfCFTA and African Export-Import Bank (Afreximbank) to establish an AfCFTA adjustment fund to address economic disparities; the development of the Pan-African Payments and Settlement System (PAPSS) to improve ease of doing business and enhance the competitiveness of small and medium enterprises; and increased investment in hard infrastructure to support trade.
Opportunities under the AfCFTA and the Way Forward: Finally, he emphasized the opportunities presented by the AfCFTA not only for potential investors, but also for ordinary Africans. He stressed that the AfCFTA will be one of Africa’s most important economic recovery tools in the post-COVID-19 context, with the potential to significantly increase Africa’s GDP, accelerate wage growth (particularly for women), and lift 30 million Africans out of extreme poverty. Secretary-General Mene specifically noted that the AfCFTA would enhance the ease of doing business, simplify customs procedures, reduce non-tariff barriers to trade, lower compliance costs for investors, and facilitate African businesses’ integration into global supply chains. Looking ahead to the future, Secretary-General Mene emphasized the AfCFTA’s long-term objectives of accelerating African industrial development, creating jobs for African youth, and better positioning the continent for global economic competitiveness. He invited U.S. investors and businesses who have not yet invested in the African marketplace to do so, and encouraged those already engaged to expand their investment through the market access opportunities offered by the AfCFTA. He noted that the AfCFTA, along with the Mastercard Foundation, has already developed a private sector engagement strategy, and that with the help of McKinsey & Company, has also identified the following high-priority value chains: pharmaceuticals, automotives, agro-processing, and financial technology.
Secretary-General Mene concluded by stressing that the cost of not rapidly implementing the AfCFTA is simply too high, emphasizing that Africa cannot remain on the margins of the global economic arena and offering the AfCFTA as Africa’s best chance for economic development and integration.
Secretary-General Mene’s lecture was followed by a question-and-answer dialogue with the more than 110 participants who attended the event in-person and virtually. During this segment, participants engaged with the Secretary-General on the ways the United States can support the AfCFTA; the crucial role of small and medium businesses for African economic growth; the importance of mutual respect in U.S.-Africa relations; the logistics of reducing non-tariff barriers; and the need to better integrate women and youth into the broader African economy.
The event was followed by a private reception during which Secretary-General Mene, Ambassador Suka-Mafudze, and Ms. Alyson Grunder, Senior Diplomatic Fellow with the Africa Program at the Woodrow Wilson International Center for Scholars, offered welcome and opening remarks.
The topic of this event is of great significance to Africa and to U.S.-Africa relations, as was reflected in the high-level participants in attendance, including Ambassador Hilda Suka-Mafudze, African Union Ambassador to the United States, Ms. Dana Banks, Deputy Assistant to the President and Senior Director for Africa in the National Security Council, Mr. Clay Hamilton, Associate Administrator for the Foreign Agricultural Service at the United States Department of Agriculture, Ms. Diana Putman, Senior Deputy Assistant Administrator for the Bureau for Africa at USAID, Ms. Julie Cerqueira, Principal Deputy Assistant Secretary for the Office of International Affairs at the United States Department of Energy, Ms. Akunna Cook, Deputy Assistant Secretary for the Bureau of African Affairs at the United States Department of State, and several private sector attendees including Mr. Keith Lee, President and Chief Investment Officer of Brown Capital Management. In all, there were 21 representatives from the African Union, U.S. Government agencies, and the private sector who attended the event in person, and at least 91 members of the public tuned in to watch the live lecture webcast.
His Excellency Wamkele Mene was elected by the 33rd Ordinary Session of the Assembly of Heads of States & Government of the African Union, to the position of Secretary-General of the African Continental Free Trade Area (AfCFTA) Secretariat. Prior to being elected Secretary-General of the African Continental Free Trade Area (AfCFTA) Secretariat, he served as Chief Director: Africa Economic Relations, at the Department of Trade & Industry of South Africa. In this role, he was South Africa’s chief trade negotiator in the AfCFTA and Tripartite FTA negotiations. During his tenure as chief negotiator, South Africa ratified both the AfCFTA and Tripartite FTAs agreements, providing new export markets in fast growing and dynamic markets in East and West Africa. Prior to assuming this position, Wamkele was Director: International Trade Law & Investment Law at the Department of Trade & Industry, a role in which he was principal legal counsel on international trade law and international investment law. From 2010 until 2015, Wamkele represented South Africa at the World Trade Organization (WTO) in Geneva, Switzerland. During his posting to the WTO, Wamkele was elected by over 130 governments to the position of Chairman of the Committee on International Trade in Financial Services, a committee comprising trade negotiators, financial regulators and financial policy makers from over 160 countries. Prior to joining the government, Wamkele worked for the law firms Simpson Thacher & Bartlett LLP in London and Milbank, Tweed, Hadley & McCloy LLP in Hong Kong. Wamkele has written and lectured internationally on international trade law, international investment law and international business law. He holds a Bachelor of Arts (Law) degree from Rhodes University in South Africa, a Master of Arts in International Studies & Diplomacy (with specialization in International Economics) from the School of Oriental & African Studies (SOAS), University of London and a LL.M. (Master of Laws) in Banking Law & Financial Regulation from the Law Department of the London School of Economics & Political Science (LSE).
Ambassador Mark Green
"There are few topics more important to realizing Africa’s potential and to strengthening U.S.-Africa partnerships than what brings us all here today. African continental free trade area and its possibilities are absolutely crucial to the continent’s future. After a COVID driven postponement, trading under this trade area commenced on January 1st 2021. To the casual observer, that commencement looked like the flip of a light switch--not so much. Of course it was years in the making and the product of much leadership and hard work. While implementation is ongoing the free trade area is poised to transform Africa into the largest free trade area in the world.
The aim is simple to improve trade and commerce with and within Africa. It helps facilitate the movement of people, goods, and capital. It prevents entrepreneurship and opportunity from being stopped at the border. It pulls vibrant communities together into even more vibrant markets.
What does that actually mean for the African people? The chance to trade translate dreams into products; jobs into careers; and African innovations into a more vibrant world. The free trade area will increase the competitiveness and resilience of African markets. Connecting a market of over 1.2 billion people with combined GDP of $3.4 trillion not only to each other but to the rest of the world. It will promote development that is economically, environmentally, and socially responsible and resilient. In short, according to a World Bank study, this free trade area has the potential to lift nearly 30 million people out of poverty."
H.E. Wamkele Mene
"We have a very significant challenge to accelerate Africa's industrial development capacity because we know, we know from the experience of others around the world that industrialization is not a short journey. That it takes decade after decade of disciplined implementation of an industrial action plan and that there is no shortcut to development.
"The African continental free trade area is a step therefore in this endeavor to rapidly transition from the vision of the founding mothers and fathers of the African Union to an integrated African market which has the potential to position Africa for global competitiveness in 30 to 40 years’ time from now.
"We know that industrialization is not a pill that you swallow and you wake up the next day you've industrialized. We know this from the experience of China who succeeded to lift over 700 million people out of poverty in less than one generation and so this vision of the organization of African Unity being discharged by the assembly of heads of states and government trough the AfCFTA has the potential to take us a step closer to an integrated market. The founding mothers and fathers of the organization of African Unity played their role. Their objective at that time, of course, was to completely defeat colonialism and unite politically the African continent and I argue that they did with the demise of the apartheid regime in South Africa in 1994. But what has for a very long time evaded our continent is market integration and an integrated economy. This is now the challenge of our time. This is why the African Continental Free Trade Area is absolutely so critical."
"We have been depicted in cartoons, in Spanish newspapers as Africans, as disease carriers who are seeking a refuge in other countries bringing our disease. These despicable notions of Africa must stop. They must stop. On the contrary, we should be congratulating Botswana and South Africa, and we should be expressing global solidarity in the fight against this pandemic instead of engaging in discriminatory and, in my view, sometimes racist stereotypes about the African continent.
"Why is the secretary general of a free trade area talking like this about a public health issue? Well it is simply because it has a direct impact on trade. Today, the countries that are subject to these restrictions have had their access to global supply chains disrupted. Today, the countries that are subjected to these discriminatory measures are not able to import life-saving drugs that they require to fight the pandemic. And we know from the position of the World Health Organization that travel restrictions do not work, that they are not based on science. They are not scientifically justified and so there seems to be very little basis to continue with them. And so, from a trade point of view, I’m very very concerned about the impact of these restrictions. I’m very concerned about the right of these countries to engage in international trade and also to engage in global supply chains."
"The biggest challenge that I see is in the area of differentials, in levels of development. We know that there are some countries that have a GDP per capita of $110. On the other extreme, there are countries that have a GDP per capita of $25,000. And also we know that there are countries that already have an industrial base and an export capacity, and so we have to focus as we implement this agreement we have to focus on those countries that today do not have, or may not have, the industrial capacity to implement the agreement.
"And that is why we are partnering with the AfCFTA, with Afreximbank to establish an AfCFTA adjustment fund, which is a fund that will require about eight billion dollars over the next six to ten years, to mitigate this adjustment and to accommodate and address these differentials that I have just pointed to. Afreximbank has already made a contribution of $1 billion to start the fund. This billion dollars will form a based capital to mobilize resources that we will need to support the adjustment fund, to support countries that today may not have the industrial capacity. The AfCFTA adjustment fund is not going to be budget support. It is going to be directed strictly to productive sector investment in a range of different areas of countries’ economies, agro processing, the automotive sector, textiles and clothing, and other labor-intensive initiatives that are already ongoing in different countries."
This event was part of the Brown Capital Management Africa Forum. The Africa Forum is a premier platform for substantive and solutions-oriented dialogue on key trade, investment, and sustainable development issues in Africa, and in U.S.-Africa relations. Launched in 2015, the Africa Forum conducts research on key development issues and provides a high-level platform for convening Africa, U.S., and international business leaders, policymakers and subject matter experts in forward-leaning policy-oriented dialogue aimed at advancing sustainable development in Africa and fostering mutually beneficial economic relations between Africa and the United States. The Brown Capital Management Africa Forum is made possible by the generous financial support of Brown Capital Management, LLC (Baltimore, Maryland).
More information about the Brown Capital Management Africa Forum can be found here: https://www.wilsoncenter.org/article/the-brown-capital-management-africa-forum.
Ambassador Mark A. Green
H.E. Wamkele Mene
Eddie C. Brown, CFA, CIC
The Africa Program works to address the most critical issues facing Africa and U.S.-Africa relations, build mutually beneficial U.S.-Africa relations, and enhance knowledge and understanding about Africa in the United States. The Program achieves its mission through in-depth research and analyses, public discussion, working groups, and briefings that bring together policymakers, practitioners, and subject matter experts to analyze and offer practical options for tackling key challenges in Africa and in U.S.-Africa relations. Read more
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