The ECA’s Country Business Index – a tool to enhance private sector’s role in AfCFTA implementation

The ECA’s Country Business Index – a tool to enhance private sector’s role in AfCFTA implementation

 

 

 

Addis Ababa, 24 May 2023, (ECA) – Africa should accelerate the full implementation of the African Continental Free Trade Area while creating a conducive business environment to attract private sector participation in one of the largest free trade areas in the world, experts have urged.

The AfCFTA is a free trade area launched in 2019 by African countries to create a single continental market with a population of about 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion. Despite its premise of boosting trade in Africa, here is mixed perception of its benefits within the private sector across the continent, according to an Index launched by the Economic Commission for Africa (ECA).

To better understand how African businesses are approaching the AfCFTA and how it can best support the private sector through trade, ECA developed the AfCFTA Country Business Index (ACBI) with the financial support of the European Union (EU). The Index enables relevant policymakers to identify bottlenecks in intra-African trade at a country level, which informs the barriers impeding effective AfCFTA implementation from the perspective of the private sector.

Recently, the ECA held an Expert Group Meeting (EGM) to present the methodology and findings of the Index to inform the implementation of the African Continental Free Trade Area (AfCFTA).

Opening the meeting, ECA Deputy Executive Secretary and Chief Economist, Ms. Hanan Morsy said, “The ACBI is the first comprehensive tool based on robust methodological framework for data collection and analysis through which businesses can voice their views on the implementation of the AfCFTA. The ACBI findings make a significant contribution to Africa’s development Agenda by identifying bottlenecks in trade regimes that need to be addressed to ensure a more inclusive trade under the AfCFTA,”

Addressing the same meeting, Head of Policy and Cooperation of the European Union Delegation to the African Union, Mr. Thomas Huyghebaer, highlighted that the development and rollout of the ACBI in 13 countries was a component of the successful EU-ECA ‘Deepening Africa trade integration toward the effective implementation of the AfCFTA’ project.

Senior Policy Officer, Integration and Trade, African Union Commission Mr. Manasseh Ntaganda, emphasized that the ACBI work will complement the AU activities under the 2023 theme to ‘accelerate the AfCFTA implementation moving forward African Integration Agenda’. He highlighted the importance of a favourable environment for the private sector to drive inclusive and sustainable development in Africa. One avenue was to scale up the work of the ACBI to all African countries in order to get an accurate picture of the private sector’s take on trading under the AfCFTA.

African Trade Policy Center Director, Melaku Desta, emphasized that the success of the AfCFTA depends on its implementation and the participation of the private sector, which needs to understand, own, and drive it and aim to take advantage of the opportunities the Agreement offers.” Through the ACBI, we are contributing to make sure that business communities are in the driving seat in the implementation of AfCFTA,” he added.

For her part, Ms. Olajobi Makinwa, Chief, Intergovernmental Relations & Africa, UN Global Compact, said the full implementation of the AfCFTA will foster economic and social development in Africa.

Research by the ECA shows that industry and services, mainly transport and tourism are expected to make the most gains from the AfCFTA.

The ACBI offers useful insights on how African businesses are perceiving trade and doing business under the AfCFTA. The ACBI reports showed results from Angola, Côte d’Ivoire, Democratic Republic of Congo, Egypt, Gabon, Kenya, Morocco, Namibia, Nigeria, Rwanda, Senegal, South Africa, and Tunisia.

The tool aggregates the opinions of businesses in Africa and articulates them in an Index that ranks countries by how well they are implementing the AfCFTA from a business’ perspective. The research methodology for the Index focused on three key dimensions: goods restrictiveness and use; African Free Trade Agreements; knowledge and use of the commercial environment.

Noting that the ACBI provides a unique and powerful monitoring and evaluation tool for African member states to gauge and understand the private sector’s take of the new AfCFTA environment, Wafa Aidi, an economist at ECA, said the Index can significantly contribute to Africa’s trade and inclusive development by identifying bottlenecks in trade regimes.

“If scaled at the regional level, the ACBI can help enhance the participation of the private sector in the AfCFTA. Notable, based on ECA simulations, the share of intra-African trade can be boosted up to 25% by 2045 by ensuring the active participation of the private sector”, she added.

 

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