The Coronavirus pandemic is a challenge that was not anticipated by the global economy and it arrived at a period when prospects for many African countries were promising. At the beginning of 2020, Africa was on track to continue its economic expansion, with growth projected to rise from 2.9 per cent in 2019 to 3.2 percent in 2020, and 3.5 per cent in 2021; but the pandemic arrived and destabilized almost all economies in Africa. In view of this, counter measures have since been instituted which are aimed at; (1), protecting the health of the citizens, (2) minimizing the spread of the virus as much as possible and (3) ensuring that the economies are shielded from adverse negative effects.
As of July 13th, there have been more than 12 million COVID-19 cases reported globally with approximately 500,000 deaths. In Africa, the confirmed cases stand at approximately 578,307 with more than 12,000 deaths and 284,972 recoveries while in Zambia, we have 1,895 cases 1,348 recoveries and 42 deaths. The impact of the COVID-19 pandemic has been both extensive and severe, including but not limited to, a health and an economic strain characterized by financial market stress and a collapse in commodity prices in several countries. The outbreak has led to disruptions in supply chains, created uncertainties and significantly dampened near-term growth prospects. The reality may depict that Africa has not been as severely affected by the pandemic compared to other global regions but in reality; Africa is vulnerable to the impact of COVID-19 because it is highly dependent on imports for its medicinal and pharmaceutical products among others. Key sectors of the African economy such as tourism, aviation, commerce, energy; are already experiencing a slowdown as a result of the pandemic. The external effects also emanate from direct trade links between affected partner continents such as Asia, Europe and the United States. This has further caused decline in Foreign Direct Investment (FDI) and remittances from African Diaspora among others.
WHAT IS THE CFTA?
The African Continental Free Trade Agreement (AfCFTA) is a flagship project of African Union Agenda 2063 and refers to a continental geographic zone in which goods and services are to move with no restrictions; among member states of the African Union (AU). The AfCFTA aims to boost Intra-African trade by providing a comprehensive and mutually beneficial trade agreements among the member states, covering trade in goods and services, investment, intellectual property rights and competition policy. The agreement brings together 1.2 billion people with a combined Gross Domestic Product (GDP) of more than US$2 trillion. The CFTA was scheduled for implementation from 1 July 2020 but this has been postponed to 2021 because of the impact of COVID-19 and the need for African leaders to focus on combating the pandemic in their respective countries.
Prospects of the CFTA amidst Covid-19 pandemic
Although the implementation of the African Continental Free Trade Agreement (AfCFTA) has been postponed due to COVID-19, African countries should continue to make progress in their national plans to liberalise goods and services. The COVID-19 pandemic has negatively affected the entire African Continent but also provides an opportunity for African countries to embark on innovative ways of business and resilience. Even though the official launch of the CFTA was postponed to 2021, African nations should swiftly begin to put up all the necessary requirements in place. African Nations must build upon the pillars of integration and start building regional value chains to advance industrialization and improve infrastructure. From the COVID 19 pandemic, it is evident that African nations must now realize the need to adopt a developmental regionalism approach to trade integration. The fight against COVID-19 must awaken urgency among African nations consolidating the prospects of expediting integration as foundation for the implementation of the CFTA when it shall be launched in 2021. Beyond the immediate response, recovery strategies for Africa should include a strong structural component to reduce dependence on external financial flows and global markets, and develop more value-adding, knowledge-intensive and industrialized economies, underpinned by a more competitive and efficient services sector. Financing for such ventures can adopt models such as the issuance of bonds (as is the case with Zambia) as well as under the Public Private Partnerships (PPPs) framework. This crisis provides an opportunity to take more concrete steps towards setting the groundwork for a successful implementation of the African Continental Free Trade Agreement (AfCFTA).
In view of the current global challenges, Zambia must remain strategic and position itself for a resilient and determined road towards economic recovery. Yes, the COVID-19 has negatively affected the economy and several businesses and now is the time to formulate a “ZAMBIA POST COVID ECONOMIC RECOVERY ROADMAP”. This strategic plan should detail steps that must be taken to springboard the economy on a path of recovery. It should detail how the 2020 national budget will be re strategized as well as how economic sectors will be strengthened to ensure that the country is able to generate substantial amount of revenue despite the difficult times facing humanity. This is also a call for concerted efforts between Government, civil society, academia and private sector to work out a plan on enhancing domestic resources mobilization using innovative means. The report that more than K6 billion has been raised from the intended K 8 billion under the COVID bond is very encouraging and will indeed assist to improve the liquidity levels in the economy that have reduced due to the Coronavirus pandemic.
The call for Zambia is to remain focused towards our aspirations in the Vision 2030, the Seventh National Development Plan (7NDP) and indeed our targets in the Medium Term Expenditure Framework (MTEF). This period should be used to re-stratergise our efforts as a nation so that we are resilient to negative global occurrences on our economy. This is also the time for Zambia to push further discussions with the International Monetary Fund (IMF) for processes and procedures towards a possible IMF programme. Overall, this period is a time to enhance our efforts as a nation as we strive towards recovery and growth of our economy.
Bernadette Deka Zulu – PMRC Executive Director