The African Continental Free Trade Area (AfCFTA); A key to mitigate the effects of the COVID-19 pandemic in Africa
The long-awaited trading within the African Continental Free Trade Area (AfCFTA) finally began on 1 January 2021, marking a very important milestone for African trade. The AfCFTA creates a single continental market for goods and services, with the aim of increasing intra-African trade by reducing tariffs by approximately 90 percent and harmonising trading rules at a continental level. The AfCFTA has the potential to increase intra-African trade by 52.3% by 2022.
The COVID-19 pandemic has inevitably delayed the implementation of the AfCFTA, in a time when harmonisation couldn’t be more important as the world clubs together to fight the novel Corona virus. Despite various regulations put in place by African governments to try and manage the spread of the disease, the pandemic continues spread across the continent. According to the World Health Organization (WHO) cases in the African region (which excludes Morocco, Tunisia, Libya, Egypt, Sudan, Djibouti and Somalia) have been significantly increasing since the middle of September 2020.
According to WHO, one of the biggest challenges in Africa is the lack of essential products such as medical supplies, pharmaceuticals, Personal Protective Equipment (PPE) and test kits. As a result of this, most African countries heavily depend on imports from overseas for these essential products. The Covid‑19 pandemic thus demonstrates the heavy import dependency and vulnerability of Africa’s pharmaceutical sector, perhaps more so than for any other industry. According to the UNECA, all African countries are net importers of medical and pharmaceutical products as Africa imports 94% of its pharmaceuticals in total [4].
Ensuring availability and access to pharmaceuticals and PPE is essential to minimise COVID-19 cases, but also to manage societal expectations. The AfCFTA is an unmissable opportunity to mitigate the effects of COVID-19 pandemic by allowing the free movement of pharmaceuticals and PPE as well as the free exchange of technical expertise.
The pharmaceutical industry in Africa is one of the fastest growing in the world, driven by a small number of countries such as South Africa, Nigeria, Ghana, some Eastern African countries and North Africa. Thus, through the AfCFTA, Africa has a great opportunity to boost intra-regional trade of pharmaceuticals and PPE. At present Africa manufactures less than 2 % of the medicines it consumes while importing about 70% from outside the continent at an annual cost of approximately $14.5 billion. [5] The AfCFTA can therefore facilitate creation of an environment conducive to establishing regional value chains in pharmaceuticals, which can be leveraged as a springboard for up-and-coming African multinationals.
The production of pharmaceuticals on the continent is important given the need not only to tackle the pandemic but other local diseases where there is no investment case for large external pharmaceutical companies. The economies of scale offered by the AfCFTA will mean market size is no longer an obstacle for pharmaceutical manufacturers to engage in local production of generic medicines (for export on the continent), or pooled procurement of medicines.
African countries can also leverage the AfCFTA to boost intra-regional trade through the harmonisation of standards as well as collective bargaining with foreign drug suppliers in the short to medium run and increasing investment in pharmaceutical production in the long run. African countries should take advantage of the opportunity given by the AfCFTA by accelerating implementation of the Pharmaceutical Manufacturing Plan for Africa (PMPA) and establishment of the African Medicine Agency (AMA).
This should be a collective effort done by all African countries by prioritising investment for regulatory capacity development; pursuing convergence and harmonisation of medical products regulation in regional economic commissions; and allocating adequate resources for AMA. With this in mind, UNECA, in collaboration with the African Union Commission (AUC), the African Union Development Agency, the World Health Organization, the Joint United Nations Programme on HIV/AIDS and the Inter-Governmental Authority on Development, launched an AfCFTA-anchored pharmaceutical initiative in 2019 to be piloted in Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Mauritius, Rwanda, Seychelles and Sudan. This adopts a three-pronged approach: localised production, pooled procurement, and harmonised regulatory and quality frameworks. With the coming into operation of the AfCFTA, this collaboration must be implemented.
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The AfCFTA as a united coherent bloc should strengthen Africa’s ability to ensure Trade-Related Aspects of Intellectual Property Rights (TRIPS) flexibilities are fully utilised in efforts to enable local production and access to essential medicines. In this regard, it is important that the AfCFTA is compatible with TRIPS to ensure that it preserves TRIPS flexibilities.
African countries can also leverage regional industrial hubs within the continent to scale-up production of pharmaceuticals and PPE. For instance, countries such Morocco, South Africa, Tunisia, Egypt and Mauritius have industrial and medical supply capacity, whose development can be accelerated through collaborations. Trade negotiators should thus ensure that medical supplies and PPE are not restricted within the AfCFTA’s “excluded lists” and consider including health services as an additional priority sector for liberalisation under the trade in services negotiations. African countries must also fast-track the finalisation of rules of origin for PPE-related textile products under AfCFTA negotiations.
Further, there is a substantial lack of technical expertise preventing African countries to fully tackle the COVID-19 pandemic and its effects.
The AfCFTA agreement provides for easy and free exchange of technical expertise through the investment plans (i.e.. National investment plans, Investment promotion agencies, partnering to facilitate investment etc.), trade facilitation measures (such as standards certification and harmonization etc.) and trade-related infrastructure measures (i.e., programme for infrastructure development in Africa).
These policies also assist in addressing the issue of infrastructure which facilitates trade and economic growth in the continent. In conclusion, the AfCFTA could be a major key to mitigate the effects of the COVID-19 pandemic in Africa should the countries and supporting industry utilise the benefits offered under the act.
Source: Chido Pamela Mafongoya
