PAFTRAC - Afrikan Heroes

Africa’s Private Sector Remains Optimistic About AfCFTA According to PAFTRAC Survey

November 23, 2023

The Africa CEO Trade Survey Report 2023 is an initiative by the Pan-African Private Sector Trade and Investment Committee (PAFTRAC), an organisation that seeks to gather the views of the African private sector and bring them to bear on trade and investment policy issues at a pan-African level.

Currently on its third edition, the report is the culmination of a survey that received over 1000 responses from senior executives across Africa. The report saw the continent’s private sector express their views on Trade, Africa’s Economic Outlook and the impact of the AfCFTA. The survey was conducted in partnership with African Export–Import Bank (Afreximbank), African Business, Botho Emerging Markets Group, AfCFTA Secretariat, International Islamic Trade Finance Corporation, International Trade Centre and AUDA-NEPAD.

Some 56% of respondents expect the AfCFTA to have a very positive effect on their businesses, while 24% think it will have a moderately positive effect. Only 1% expect a very negative effect. The respondents, which represented predominantly small and medium-sized enterprises, were located in 48 different countries, 44 of which were in Africa.

“A majority of respondents in the 2023 PAFTRAC survey are optimistic that the AfCFTA will have a positive effect on their businesses. This has been underpinned by the AfCFTA’s commitment to ease access to markets and foster trade and economic growth. However, this optimism can only be realised if the necessary support required by respondents to benefit from AfCFTA is extended to them by regulators, and with aid from the developmental institutions to push for enabling policies,” said Prof. Patrick Utomi, Chairperson of PAFTRAC.

However, the survey found that 72.9% of respondents had a low to moderate level of awareness of the AfCFTA, with low access to information about it. Some 49% had not heard about the Pan-African Payment and Settlements System – a centralized payment and settlement system for intra-African trade in goods and services – and a similar number were unaware of the AfCFTA’s work on reducing non-tariff barriers, two of its most important operational instruments. In a similar vein, large numbers expressed concern about the threat of increased competition, reflecting a lack of awareness of the measures in place to protect vulnerable markets in the early stages of implementation.

“One thing seems clear from the results of our survey: more information on the AfCFTA and its operational instruments is needed to allow African companies of all sizes to take advantage of the opportunities on offer. Many of the participants said that they had little or no knowledge of key aspects of the free trade area, meaning that they are unable to take full advantage of it. They cannot make use of easier trade conduits and reduced barriers to trade if they are not aware that they exist. Here too, digital technology offers the ideal solution but a combination of adequate funding and promotion by the AfCFTA Secretariat or other relevant bodies is needed to make it effective,” the authors write.

More information on growing trade and market opportunities is regarded as by far the most important form of support companies need to benefit from the AfCFTA. Greater access to credit and an improved trading landscape through a focus on training, investments and regulations are all regarded as being beneficial but none come close to the information deficit in terms of perceived benefit.

“Of great importance is access to information, credit and improving the trading landscape through a focus on training, investments and trade-friendly regulations and regulators in order to allow SMEs to take advantage of the AfCFTA,” says Prof. Utomi.

The main perceived benefits of the AfCFTA on business prospects are increased market size, the potential for new investments and better access to raw materials. However, the eroding of both tariff and non-tariff barriers is also regarded as the biggest threat that the AfCFTA could pose because of the increased competition it could bring, as cited by 27% of respondents.

Despite the headwinds generated by high inflation, debt levels and interest rates, 80.1% of survey participants said that they were confident about Africa’s economic outlook for this year, albeit only 14.2% described themselves as very confident. These figures are roughly on a par with last year’s results, suggesting general optimism over the continent’s economic prospects.

“The road to implementing the AfCFTA successfully is still long, but through the collaboration of the public and private sector, a successful, Africa-wide free trade area can become a reality,” said Prof. Utomi.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

AfCFTA Drives Optimism Among Africa’s CEOs Despite COVID-19 Uncertainty

December 15, 2021

African CEOS expressed optimism about their business and economic growth over the next 12-18 months. A new survey of African CEOs from 46 countries conducted by PAFTRAC, the Pan-African Private Sector Trade and Investment Committee, found that CEOs were confident that their businesses will grow in the next year. A majority are also optimistic about the economic outlook of their industry. In addition, 87% of respondents believe that there will be in increase in intra-African trade as a result of the African Continental Free Trade Agreement.

The CEOs believe that the global recovery led by greater demand will drive Africa’s economic recovery. Interestingly, their positivity stems more from their faith in international and regional trade strategies and agreements such as enhancement of trading opportunities through AfCFTA, rather than as a result of national economic recovery strategies like ease of lockdown restrictions or better national business climate.

Commenting on the survey, Pat Utomi, Chair of PAFTRAC, said, “The positive sentiment expressed by survey respondents demonstrates the potential of the AfCFTA and the eagerness of Africa’s private sector to take advantage of the market access opportunities it offers. However, access to trade information, trade enabling infrastructure and trade finance emerged as key constraints that need to be addressed to ensure that intra-African trade opportunities are exploited for the benefit of African SME’s.

“One major advantage of AfCFTA is that it can enable aggregation across borders so that African countries can pool products in volumes and quality that make them more competitive in global markets.”

The respondents expressed strong faith in AfCFTA. Over 71% of respondents believe that the AfCFTA will encourage them to invest to grow their business regionally. More than half of respondents (57%) also believe that the AfCFTA will open up new markets to export regionally and provide the necessary frameworks to export more regionally (62%). The four top export destinations in Africa are South Africa (27%), Ghana (25%), Kenya (25%) and Nigeria (19%).

African CEOs said the key challenges they foresee, which will have a negative impact on Africa’s economic recovery prospects, are a lack of access to finance (64%), the ongoing impact of the COVID-19 pandemic on economic opportunities (61%) and a slow down or lack of public sector investment and expenditure (48%).

Though the appetite for regional trade is strong, a majority of respondents placed access to trade finance and access to investment capital as the two biggest constraints when trading regionally.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

World Trade Organisation (WTO) Should Hear Africa’s Voice—PAFTRAC

September 11, 2020

The preponderance of Agriculture subsidies and non-tariff barriers especially in advanced economies has been highlighted as a specific hindrance to development in Africa. This was contained in a Communiqué following a meeting convened by the Pan-African Private Sector Trade and Investment Committee (PAFTRAC. The Communique which sets out a road map for WTO reform calls for development to be at the centre of WTO reform; Agriculture subsidies and non-tariff barriers highlighted as a specific hindrance to development.

Following a meeting convened by the Pan-African Private Sector Trade and Investment Committee (PAFTRAC) and hosted by the Afreximbank, a communiqué addressed to members of the WTO and the eight candidates who have been shortlisted as the institution’s next Director General was released yesterday calling for a wide range of reforms.

The communiqué was formulated following numerous consultations with PAFTRAC members, its institutional partners, and through a comprehensive survey of the African private sector. Within it, the Committee have highlighted a number of recommendations to ensure the institution is more effective in growing global trade but doing so in a manner that is fair to all.

The communiqué stated that “ignoring the voice of Africa and other emerging economies will have dramatic consequences for and undermine the relevance of the WTO and the rules-based system at a time when multilateralism is already under threat.”

In the opening remarks at the meeting, the President of the Afreximbank stated that “Africa has played an important but largely under-valued role in the global economy.” He cited that Africa’s global share of trade has fallen from 4.4% in 1970 to 2.5% today, whilst the share of Asia has risen from 7.7% to 20% over that same period. “Whilst this is the result of numerous factors, including fragmented markets and persistent supply-side constraints,” he said, “tariff escalations and stringent standards on final goods in developed economies have limited Africa’s potential to move up value chains.”

The communiqué called for the WTO to ensure “that development issues are front and centre of its reform agenda.” They specifically called for African countries to be afforded Special and Differential Treatment that will allow flexibilities and sufficient policy space to support local industries and advance development. The African private sector also emphasised the importance of addressing subsidises and state-aid in developed economies which continue to confine Africa to the bottom of global value chains.With the African Continental Free Trade Agreement (AfCFTA) coming into effect in 2021, they also requested that African integration under the AfCFTA and the establishment of an African Common Market is not undermined by multilateral negotiations.

The organisers called for the voice of the African private sector to be “heard and considered under the multilateral framework,” so that the private sector can not only compete fairly but also grow. Trade, they said, is vital to generate the volume and quality of jobs required to absorb over 17 million young Africans who are entering the labour market every year. PAFTRAC unites African leaders from the private sector and provides a unique advocacy platform bringing together the African private sector and African policymakers to support extra and intra-African trade, investment and pan-African enterprise.

The platform drives pan-African results by providing a framework for private sector engagement in trade and investment issues in Africa, including policy formulation and trade negotiations to support African economies in line with the ambitions of Agenda 2063: “The Africa We Want”. PAFTRAC enhances advocacy and supports policy actions and recommendations of the private sector on trade; and investment issues at the national, trade corridor, regional and multilateral levels.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry