Outcomes of the 51st Session of the Conference of African Ministers of Finance, Planning and Economic Development
The African Continental Trade Area (AfCFTA) should be shaped and implemented to enable Africa to create opportunities for its citizens; spur the continent’s industrialization agenda; and ensure inclusive growth, says Ethiopia’s Prime Minister, Abiy Ahmed.
Speaking at the recently-concluded 51st session of the Conference of African Ministers of Finance, Planning and Economic Development in Addis Ababa, Mr. Ahmed said with the AfCFTA, Africa’s economic integration was inevitable.
“Together we will grow; together we will give our young people a stake in the future of our continent. We will harness their energy and creativity for collective wellbeing,” the Prime Minister said, adding: “We need to also increasingly engage the private sector in ensuring economic integration and introduce aggressive policies to broaden women’s access to economic opportunities.”
He said governments on the continent were looking up to their finance ministers and Central Bank Governors for leadership that will ensure that trade was not an end in itself but the means to advance the wellbeing of Africans.
Mr. Ahmed said Ethiopia was fully aware of the opportunities that the free trade agreement offered and was ready to “follow Rwanda and Ghana for their pioneering role in the ratification of the AfCFTA”.
He urged other African countries to sign-up to the AfCFTA and those that have already done so, to ratify quickly so the agreement can soon come into force. At least 44 countries signed up to the agreement that will bring together 1.2 billion people with a combined gross domestic product (GDP) of more than US$2 trillion.
By creating a single continental market for goods and services, the continent hopes to boost trade between African countries.
We, African ministers of finance, planning and economic development,
Meeting in Addis Ababa on 14 and 15 May 2018 for the fifty-first session of the Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development,
Honoured by the video address of the Champion of the African Continental Free Trade Area, the President of the Niger, Mahamadou Issoufou, in which he called upon all African countries to expedite the ratification of the African Continental Free Trade Area,
Honoured by the presence of the Prime Minister of Ethiopia, Abiy Ahmed; the Deputy Chairperson of the African Union Commission, Thomas Kwesi Quartey; and other high-level dignitaries and special guests,
Inspired by the opening statements of Mr. Kwesi Quartey; the Minister of Economics, Finance, and Planning of the Republic of Senegal, Amadou Ba; the Executive Secretary of the Economic Commission for Africa, Vera Songwe; and the Governor of the Central Bank of Ireland, Phillip Lane,
Having deliberated on the theme “African Continental Free Trade Area: fiscal space for jobs and economic diversification” and cognizant that, with the signing of the Agreement Establishing the African Continental Free Trade Area by 44 member States of the African Union, the continent has laid the foundation for a new phase of African integration,
Do hereby state that:
We note that the gross domestic product of Africa grew at a rate of 3.1 per cent in 2017, up from 1.6 per cent in 2016, registering the second-fastest growth rate of any region in the world, after East and South Asia. This economic performance was due mainly to continued improvement in macroeconomic management, increased public and private investment, growth in private consumption and a rebound in trade. Africa is expected to continue its recovery, growing at 3.6 per cent in 2018 and 3.8 per cent in 2019. Potential risks to growth in Africa could, however, include a slow recovery in advanced and emerging economies, the tightening of financial markets in developed economies, weather-related shocks and security concerns in some countries;
We recognize that Africa has made significant progress in achieving desired economic and social outcomes, with poverty rates declining in the various subregions, albeit at a slow pace. Notwithstanding these improvements, a number of challenges remain. Poverty and unemployment, in particular among young people, persist, together with increasing income and gender inequalities;
We acknowledge that promoting peace and security as well as stability, along with combating violent extremism and terrorism, are critical undertakings for Africa in its endeavour to achieve inclusive and sustainable development. We therefore call upon member States to continue collaborative efforts to ensure that peace and security are upheld in Africa and throughout the world;
We recognize that African countries have made progress on the various dimensions of regional integration, such as trade, regional infrastructure, financial and productive integration, including regional payment systems, the free movement of persons and the right of establishment. Numerous obstacles still need to be surmounted in this regard, however;
We reaffirm our commitment to regional integration as a major driving force behind inclusive economic development in Africa, and welcome the new milestone reached in African integration through the signing of the Agreement Establishing the African Continental Free Trade Area in Kigali on 21 March 2018 by 44 member States of the African Union;
We welcome the launch of the single African air transport market in January 2018, which has the potential to improve the efficiency of continental air transport and to contribute to the growth of the continent’s global share of the aviation and tourism industry, and encourage all member States to join this initiative;
We recognize the potential of the African Continental Free Trade Area to advance African industrialization, economic diversification and development that sustain the creation of decent jobs on the continent and foster prosperity for all Africans, consistent with Agenda 2063 of the African Union and the 2030 Agenda for Sustainable Development. Accordingly, we note the importance of promptly ratifying and implementing the legal instruments of the African Continental Free Trade Area;
We acknowledge the importance of national plans and strategies to seize the opportunities presented by the African Continental Free Trade Area. These national plans and strategies should be designed to complement the broader trade policy of each State and identify the key trade opportunities, current constraints and steps required to take full advantage of the African market, including the empowerment of women and young people;
We note the need to pursue policies and investment to make the most of the opportunities presented by the African Continental Free Trade Area, as outlined in the Action Plan for Boosting Intra-African Trade. This will include supporting trade facilitation measures, including simplified trade regimes for informal cross-border traders, upgrading infrastructure and improving the business environment to attract the private sector, which will help African firms to take advantage of the opportunities presented by the African Continental Free Trade Area;
We are mindful that the current infrastructure bottlenecks in Africa remain a serious impediment to the continent’s integration, and commit ourselves to pursuing efforts to modernize and expand our infrastructure assets, in particular the railways, which remain the most efficient and environmentally sustainable way of moving people and goods. In this regard, we note the importance of international instruments on matters specific to railway rolling stock;
We note that the short-term impact of the African Continental Free Trade Area on tariff revenue is likely to be minimal and will be outweighed in the medium and long term by positive impacts of revenue from other sources of taxes as a result of expected increases in growth and economic diversification;
In this regard, we recognize the importance of enhancing fiscal space and sustainability in our countries and maintaining investment in the social sector, in particular in health and in education. In particular, we will strengthen efforts to increase our tax revenue by boosting our tax-to-gross domestic product ratios to achieve a minimum level of 20 per cent over the next three years in each of our economies. Efforts will also include action to pursue new sources of tax revenue, including levies on financial transactions, royalties, income taxes, land taxes and leases, and by encouraging private sector growth and moving informal businesses into the formal sector;
We also acknowledge the importance of increasing the efficiency of tax administration in our countries by modernizing tax systems, further improving economic and corporate governance in the extractive sector and mobilizing additional revenue from natural resource rents;
We note the significant losses of tax revenue that result from base erosion and profit shifting by multinational corporations and are cognizant of the need to take measures to tackle these problems. We encourage the investment chapter that will be negotiated under the second phase of the African Continental Free Trade Area to address loopholes that encourage treaty shopping and enable multinational corporations to reduce their tax liabilities using existing intra-African international investment agreements;
We also underscore the need to take steps to tackle harmful competition among African countries, including by using the second phase of the African Continental Free Trade Area negotiations on competition policy;
We note the need to improve the quality and efficiency of public spending. In this regard, we encourage African countries to implement integrated resource mobilization, budgeting and development planning processes and decentralized public financial management; to intensify efforts to combat corruption; and to simplify subsidy and procurement regimes and approval processes for investment;
We note that private finance presents a large potential source of capital to fund public projects. Accordingly, we are cognizant of the need to develop and deepen domestic capital markets and leverage private capital for development projects, while ensuring that such projects provide balanced risk-sharing and accountability within a coherent overall development strategy;
We recognize the need to make use of government borrowing as a source of financing for development, while ensuring that borrowing remains within sustainable limits. We also recognize that decisions to implement the African Continental Free Trade Area can assist us in gaining access to additional international financial resources;
We acknowledge the continued efforts of the Economic Commission for Africa and other United Nations agencies, working closely with the African Union Commission, the African Development Bank, the Planning and Coordinating Agency of the New Partnership for Africa’s Development, the African Capacity- Building Foundation and the regional economic communities, to make African integration a reality. This effort will be enhanced by the African Union-United Nations framework for the implementation of Agenda 2063 and the 2030 Agenda for Sustainable Development;
We also underscore the benefits of migration for economic and human development in Africa. We therefore stress the importance of cooperation at the national, regional and international levels to ensure safe, orderly and regular migration with respect for the human rights and dignity of migrants, regardless of their origins or status;
We call upon the Economic Commission for Africa to continue its close collaboration with the African Union Commission and other regional, continental and international institutions such as the regional economic communities, the African Development Bank and the United Nations Conference on Trade and Development to provide technical support to facilitate the ratification process and implementation of the African Continental Free Trade Area;
We also call upon the Economic Commission for Africa to support member States in enhancing their fiscal space and mobilizing additional domestic resources through strengthening tax administration, improving the efficiency and effectiveness of public spending, developing and strengthening capital markets and leveraging private financing, and improving debt sustainability;
We are cognizant of the significant and preeminent role of human and institutional capacity development in the achievement of the aspirations of Agenda 2063, the Sustainable Development Goals and the African Continental Free Trade Area. We appreciate the commendable work that the African Institute for Economic Development and Planning is undertaking in this respect. We call upon the United Nations to continue and to increase its support to the African Institute for Economic Development and Planning in support of the structural transformation of Africa;
We welcome the offer by Morocco to host the fifty-second session of the Conference of African Ministers of Finance, Planning and Economic Development.
Vote of thanks
We thank the Government and people of Ethiopia for the hospitality that they have continued to afford the Economic Commission for Africa and for the courtesies extended to us, which have ensured the success of our meetings;
Lastly, we wish to extend our gratitude to the Economic Commission for Africa for successfully convening the fifty-first session of the Conference of African Ministers of Finance, Planning and Economic Development.