Ethiopia’s Prime Minister, Dr. Abiyi Ahmed, has urged finance ministers and policy makers to use their collective vision to create the right conditions and commit the necessary resources for the creation of the world’s largest trading bloc.
Dr. Ahmed was speaking this week during the official opening of the 51st Conference of Ministers,
The transformational opportunities offered by the African Continental Free Trade Area (AfCTA), together with the measures needed to unlock them, have been the focus for a High-level Ministerial Dialogue convened by the UN Economic Commission for Africa (ECA) in Addis Ababa, Ethiopia.
The meeting ran from May 11th to May 15th, 2018.
“Let us finance our own development,” said the Prime Minister, who stated that his government is ready to ratify the AfCFTA deal and deposit its instruments to the African Union.
“There are no losers with the AfCFTA. We are all winners,” Dr. Ahmed added.
He also stated ithe agreement must create inclusive prosperity for all Africans, including marginalized and vulnerable communities.
Discussions on the theme ‘The African Continental Free Trade Area: creating fiscal space for jobs and economic diversification’ addressed specific concerns in relation to falling tax revenues arising from the free movement of goods.
According to the ECA, however, the ratio of tax revenue to gross domestic product is already low in African countries. The ratio for many of them falls below 15%, which is widely considered the minimum threshold for a state to function efficiently.
Philip Lane, Ireland’s Central Bank Governor, drew upon his country’s experience within the European Union trading bloc to explain how such structures can offer economies sustained growth. Addressing the opportunities arising from such a bloc, he remarked that “a large export base provides stability, the diversification of markets and economic transformation through free trade.”
The resulting growth in prosperity leads to the tax base broadening, especially for small states whose ‘home market’ grows as cross-border trade expands to embrace other countries.
The importance of infrastructure and logistics for the AfCFTA was a major focus for the meeting. Vera Songwe, Executive Secretary of the ECA, emphasised the importance of ensuring trading happens in a ‘seamless’ way along the vital road corridors of the continent. She observed: ‘If we provide the infrastructure and border reforms necessary through the AfCFTA we can create jobs and growth.’
Prof. Emmanuel Nnadozie, Executive Secretary of the African Capacity Building Foundation, however, called for caution in relation to ensuring nations actually implement the plan.
“Capacity is at the centre of the problem,” he said.
He explained that robust institutional arrangements, appropriate regulatory changes and private sector involvement would ensure the AfCFTA is implemented in a speedy and efficient manner.