CFTA set to unleash Africa’s full potential, says ECA’s Songwe
Africa’s signature policy reform of 2018, the Continental Free Trade Area (CFTA), is set to unleash the continent’s full potential with more African countries trading with each other in a wider integrated market, says Economic Commission for Africa’s (ECA) Executive Secretary, Vera Songwe.
In opening remarks to the 5th Annual Ministerial Symposium at the 2018 Mining Indaba that kicked off Monday in Cape Town, Ms. Songwe said the mining sector on the continent was set to benefit the most from the CFTA and could help with the transformation of Africa’s economies.
“The CFTA is a singular policy move that will actually help your business, help the continent create more jobs and ensure that we create enough value on the continent and increase intra-African trade,” she told mining executives and others attending the Mining Indaba.
“When African countries trade with African countries more value is created and therefore we believe we can do more than that with the CFTA,” said Ms. Songwe, adding intra-African trade had increased from five percent in 2012 to 17 percent currently.
“If you became part of that process of transformation, of creating value chains on the continent, we would do a lot more and create a lot more jobs on the continent. This is really the purpose of the CFTA, to see if we can create a wider integrated market – which will have 1,5 billion people by 2030 with a potential GDP of $2,2 trillion dollars,” she said.
The symposium and its roundtable discussions focused on six main areas: Lack of Trust; Lack of Engagement; Capacity Deficit; Governance and Regulations Gaps; Inter-sectoral linkages; and the Need of greater engagement of the Financial Sector.
The ECA Chief emphasized the need for the mining sector on the continent to help African countries in their bid to increase domestic resource mobilization, a topic that was discussed by African leaders at their just-ended African Union Summit in Addis Ababa, Ethiopia.
“One of the big discussions was how we raise domestic resource mobilization and ensure that there are resources on the continent, from the continent to ensure development,” she said, emphasizing the need to stem base erosion and profit shifting and illicit financial flows (IFFs) that she said were hindering Africa’s desire to up domestic resource mobilization.
“There’s a sense that many of us in this room here today are part of the problem and I think that the onus is on us to ensure that we can demonstrate in a credible way that that is not the case,” Ms. Songwe said, adding there was also a sense that the mining sector on the continent was “not contributing its share towards domestic resource mobilization and the question is how can we, as a collective, ensure that this perception, however, faulty it may be, can be put to rest”.
She said the ECA was ready to work with the mining sector and other stakeholders to ensure the perception was changed and that there’s a win-win situation between the mining firms and African governments in domestic resource mobilization.
“We know that in a typical mining project, government revenues from taxation only accounts for about 17 percent of total revenues over the lifetime of the project. Meanwhile, over 60 percent of capital expenditure in a typical mining project relates to procurement of inputs,” Ms. Songwe said.
She emphasized the need for transparency and good governance in the mining sector that can help transform the African continent as governments on the other hand play their part in creating environments that makes it easier for mining conglomerates and other investors to do business on the continent.