S1-Episode 1: African Continental Free Trade Area

Intro jingle

Bonjour! Asalaam Aleikum! Jambo! Mbote!

This podcast is coming to you from the United Nations.

It is about Africa and people who, through their stories and actions, are advancing hope on the continent.

Episode intro

Josephine: This is the Africa Renewal podcast, I am Josephine Karianjahi.

Melissa: I am Melissa Mbugua.

Josephine: In this episode…

Dr. Joy Kategekwa: Trade is a means to accelerate the attainment of the #Africawe want and the attainment of the SDGs.

Episode background

Josephine:

In this episode, we get to speak to an expert in trade policy who is one of the architects of the African Continental Free Trade Agreement – that set the stage for the creation of one African market of 1.2 billion people with a combined GDP of $3 trillion.

And why is this important? A UN Economic Commission for Africa report shows that in 2018, Africa accounted for only 2.6% of global trade. At the same time, Africa is not trading much with itself, with intra-African exports standing at about 17% of total continental exports. Increasing this share is expected to increase value addition, help create jobs and boost prosperity on the continent.

The creation of the Continental Free Trade Area is a huge diplomatic and political success given the short timeline since the agreement was signed and its entry into force, the ambitious trade liberalization goals set and the large number of Member States that have committed to its implementation.

Our guest today is Dr. Joy Kategekwa, and she is the Regional Strategic Advisor to the Assistant Administrator and Director for the Regional Bureau for Africa at the United Nations Development Programme (UNDP).

She served as head of the UN Conference on Trade and Development (UNCTAD) in Africa, leading the delivery of the organization’s trade capacity-building programmes across the continent.

She is an international trade and development law and policy specialist and has spent most of the last two decades shaping development-friendly trade agreements at both the    World Trade Organisation and in regional contexts. She is one of the architects of the historic African Continental Free Trade Agreement, having led technical teams in drafting its legal instruments.

Melissa: 

The African Continental Free Trade Area is a flagship project of the African Union’s Agenda 2063 and was approved by the African Union’s 18th Ordinary Session of the Assembly of Heads of State and Government held in Addis Ababa, Ethiopia, in January 2012, which adopted the decision to establish a Continental Free Trade Area. Most importantly, free trading under this new agreement officially began in January 2021.

The aim was to accelerate intra-African trade and boost Africa’s trading position in the global market by strengthening Africa’s common voice and policy space in global trade negotiations.

The African Continental Free Trade Agreement - setting up the free trade area - was signed on March 21, 2018, in Kigali, Rwanda, and came into force on May 30 the following year.

The scope of the African Continental Free Trade Agreement includes protocols on Trade in Goods, Trade in Services, Rules and Procedures on the Settlement of Disputes, Investment, Intellectual Property Rights, Competition, Digital Trade, and Women and Youth in Trade.

The continental trade pact’s goals include opening up trade in Africa by increasing intra-African trade, increasing Gross Domestic Product—which is a measure of total output and income within an economy, boosting employment and transmitting gains across every strata of the African population, particularly women and youth. The AfCFTA Secretariat is based in Accra, Ghana, and was inaugurated in August 2020.

We hope that by the end of this episode, we will better understand more about what the African Continental Free Trade Area is and how it affects Africans and different types of businesses.

Dr. Joy Kategekwa: My name is Joy Kategekwa. I'm a trade and investment lawyer. I work with UNDP, where I advise the senior management on development strategy, development policy, including in the area of the African Continental Free Trade Area. I'm passionate about trade. I believe it can be a lever, it can change the game. It can make things happen on the continent to transform out of poverty and to defeat many of those challenges that are still holding the continent back. So, I'm very pleased to be here and to engage in this conversation.

Melissa: How would you describe the African Continental Free Trade Area in your own words?

Dr. Joy Kategekwa: The African Continental Free Trade Area is a transformative treaty that seeks to accelerate the hopes, aspirations, the dreams of Africans to defeat the challenge of poverty. It does this by correcting the historical wrong with high tariff structures between and amongst African countries.

Josephine: So, since the start of trading, there’s been a lot of excitement. Could you paint a picture for us so that we can see what is really possible going into further years of trading?

Dr. Joy Kategekwa: I think what's really possible are two things. One, is that you have a stronger system of readiness in place, precisely because of the nature of the work that has been done in 2021. Trade agreements are implemented through strong institutional setup, establishing those committees, establishing those institutional processes, establishing a strong Secretariat that can manage the oversight of the preferential treatment that the AFCFTA is about, finalizing negotiations on critical getaway issues, like rules of origin, that will help to delineate the scope of what is truly made in Africa. It has also been about preparing those instruments that will accelerate the operationalization around payment systems and so on and so forth. And so, you can expect stronger readiness and a flow of goods and services across Africa.

Josephine: And specifically around women, youth, and small and medium enterprises, what can they expect to characterize their next few years?

Dr. Joy Kategekwa: You're starting to see the emergence of contours, of sectors that are going to be available concretely. Some of these include areas like automotive, areas like lithium iron batteries, areas like leather and leather products, soya, cocoa, pharmaceutical, production type areas. We also see areas around financial services and cultural services. So, this is the basket of goods and services that we are seeing. And often, this is the result of some of the recent research that UNDP and the AFCFTA Secretariat have put out. It means that women and youth can expect to start to prepare to access markets, to prepare for production in those areas that are emerging. They can expect to start to try to enter, sustain, and scale their participation in value chains in some of those areas. They can expect basically to start to see the fruits of the one African market if they strategically position for what is on offer preferentially.

The studies also tell us that there will be a doubling of intra-African trade. They tell us there will be huge savings if we fast-track issues like trade facilitation. They tell us that if governments take a complementary approach to enhance the enabling environments, using regulations as a stimulus, that you will see big savings in the billions of dollars for business. What they also tell us specifically about women, is that there will be an 18% increase in trade in those sectors in which women are most participating. So you have services, you have agri-processing. And so it is for women and youth-owned exporting enterprises to start to position asking the question, "How can I take advantage of that which is on preferential offer in the one African market?"

Melissa: Fantastic. That's a really, really clear breakdown. I'm sure the audience will be taking notes. How did you get involved in creating this historic policy?

Dr. Joy Kategekwa: Well, it's an interesting story. I'm a trade lawyer. I've spent my entire career working on trade deals. I started out negotiating for my country, Uganda, at the World Trade Organization. I then moved on to different configurations, one of which was as an official at the World Trade Organization Secretariat. And then I also had the privilege to establish the UNCTAD Regional Office for Africa. It was a unique time because when I took up this role, there had just been that decision to fast-track the establishment of the African Continental Free Trade Area. At that time, we used to call it the Continental Free Trade Area, the CFTA.

And so it was serendipity that the role I held at the time as the Head of the UNCTAD Regional Office for Africa, at a time when the political dispensation met with a skillset and a mandate that I had, I think it allowed me to use that space, the institutional strength and capacity of UNCTAD, to help, and to support the African Union and their leadership—the Commissioner For Trade— and to work also with partners such as ECA and others, to transform this political wheel, this political mandate, to fast-track acceleration of the establishment of the CFTA into technical, workable, legal instruments that can allow you to move from modalities into working documents that eventually found expression, through a negotiation process, in what we now know as the AfCFTA.

And so, I think looking back,  it was the hand of God. It was the hand of God. It was career choices one made. It was being in the right place at the right time. It was in understanding the value of partnerships. And it was really in maximizing the assets that one had picked up over time, having been supporting negotiators, having been advising African governments on how to do trade deals, having been supporting from the capacity-building angle. All of that support came to bear in that position that  I held previously, which allowed us to make a contribution to what we now have as the AfCFTA.

Josephine: It really is a moment that met you. It sounds very timely, and also an opportunity for those who are listening who haven't quite gotten a chance to experience the long view of trade and industrialization in Africa to hear your perspective. And thank you for sharing your initial entry into this space, and it also feels like it's a really critical moment for trade and industrialization in Africa overall. If you look at some of the businesses that have been awarded through the AfCFTA caravan, some of the ventures that they're taking part in are truly transforming what's possible across the continent. And at the World Trade Organization, of course, Dr. Ngozi Okonjo-Iweala, an African woman, is leading. And for us to also now think about how the African Continental Free Trade Area is continuing to become a part of everyone's reality, it truly allows us to reflect on what's possible. How did you feel about being involved in this historic moment as a Ugandan, as an African, as a member of several different communities and as part of Africans working on the global stage?

Dr. Joy Kategekwa: People pick careers for different reasons. I think in my case, I was always fascinated at the contradiction between having so much wealth and yet so much poverty, and I always found myself unable to comprehend why it is that we cannot be in control of the destiny, the socio-economic development of our countries, sitting amidst a lot of wealth. Think about all the African countries: great resources in material wealth, in human capital. And so, when I started to make decisions as to which part of the law I would specialize in, I always knew that it was going to be about cracking those problems that make it impossible for us to determine the prices of our commodities, for us to take our commodities from raw material into value-added products, for us to create those industries that can supply the world with high-quality goods.

And the branch of trade and investment law I took on focused on these things. And so, many years later, the AfCFTA becomes part of the equation, I think lots had been picked up in terms of frustration, but also in terms of deepening knowledge on what to do. And so, with all of that sitting in a place where the brief is to do it for Africa, I think there was a strong sense of duty and responsibility: that we have an opportunity now to pick that which we have seen, that works, that does not work very well, and pull it together to say, how do we adapt it into the context of Africa to accelerate socioeconomic progress, to build on that profile that's already taking place in Africa.

Josephine: Against a backdrop of the COVID-19 pandemic, a lot of the cross-continental traders have found that their businesses were very heavily impacted, including many of those who've shared their stories over the course of the last two years. So how have you seen the AfCFTA and indeed the businesses that have continued to become involved in cross-border trade affected by the COVID-19 pandemic?

Dr. Joy Kategekwa: So there are two angles to that. One is the pattern, the traditional pattern, as we know it, the dominant pattern, because if you have 17% intra-African trade, the majority's with the rest of the world. But there's another story. And that's the story that fascinates me, which is that when things are shut down and the need remains, it tells you two things. One is that the capacity of African suppliers, producers to push and produce for that demand is incredible. And is indeed the promise of the AfCFTA when you think about it. It also tells me that there was something wrong with a trade policy that kept that potential locked, and so what the AfCFTA does in a COVID dispensation is create a psychological tipping point that enhances the belief that indeed this can be made in Africa, and that there is a market for these products when made in Africa.

So in some, I think it's a positive story for trade, because while we had a tumbling, I think the numbers from UNCTAD talk about 17% of a tumble in manufacturing, I think we saw a rise in pivoting of domestic production to meet those needs. Now, when that domestic production has gotten a window to showcase what it's capable of doing, when it is complemented by a tariff structure that makes the markets ashore a viable export proposition, when it is complemented by a political cloud that is pushing for made-in-Africa, I think we are onto something different here. It's not going to be automatic. It has to be worked at with intentional focus.

Melissa: What’s in place right now in the various countries for the entrepreneur to start to tap into so that they can set themselves up to begin to enjoy the benefits?

Dr. Joy Kategekwa: There will be this part around the practicalities of identifying the players. And so, it's almost like the key stakeholder, the key interlocutor in this conversation becomes the exporters themselves. Understanding who they are, where they are, what they're producing, and what their bottlenecks are. Because that level of precision takes it from treaty text into the third pillar, which is targeted capacity-building programs that are linked specifically to the bottlenecks that particular exporters are facing. So when you think about it, when the governments prepare well, they prepare the enabling framework, they prepare the policy framework. They are intentional in supporting the capacity of exporters by creating that space, so to speak. Because, typically, you're talking about practicalities around financing, around meeting standards, around packaging, around trade facilitation procedures that fast track their capacity to move around thinking about whether there is a way to create regimes that are closer to informality or non-formality, as some would call it. So we have to move from the broader into targeted capacity-building programs, where the threshold for success is not so much how much did we increase awareness as it is how much did the exports rise.

Josephine: I think I would really want to know, as Africans all over the world who are listening, and people who are involved in Africa’s development, how can they support the expansion of the  African Continental Free Trade Area from an everyday kind of ordinary level?

Dr. Joy Kategekwa: I would say maybe two, three ways. The first is to know the opportunity. You can't utilize what you don't know. So, know the opportunity. The second one is for exporters, for those who want to produce those Made in Africa products to demand the AfCFTA treatment. Because remember, it's preferential treatment. There's a regime ongoing right now, so trade has not stopped, intra-African trade has not stopped. It would only be accelerated by the AfCFTA. So, demanding that treatment as you cross borders, that is the zero-rated tariffs as countries have put in their offers, is critical from the accountability side. The third one is for everyday people, yourself and myself, to create the market. Create the market by demanding that with your money you will buy those products, by voting for those products. So, when we think about Made in Africa, what are we talking about? We're talking about the goods and services that we consume every day. We're talking about a conscious decision to vote for those products by demanding them when you find a place where they're being sold. That demand must be a demand for quality, a demand for skill, but it must be a demand that chooses them when they're available. Because in that choice is the backstory around pushing the production, around pushing for them to employ more people, around getting feedback to them, that they understand that the quality could improve here and there. That is how we make the market happen. And above all, in that choice, is the confidence you give to them, that their products are worthy, and that their products can be utilized. And that is how we start to see that indeed trade is a means to accelerate the attainment of the Africa We Want, and the attainment of the SDGs.

Episode outro

Melissa: This episode of the Africa Renewal Podcast was produced by the United Nations United     Department of Global Communications and Africa Podfest.

Josephine: Follow Africa Renewal on Twitter and Facebook. Check out the show notes for more insights on this topic.

Outro jingle

The Africa Renewal Podcast provides factual perspectives on economic, social and development affairs in Africa.

You can find this podcast on Google Podcasts, Spotify, Apple Podcasts and wherever you listen to great Africa-focused podcasts.