As the continent has begun to roll out a free trade agreement, one of the sectors that will play a very critical role in the industrialisation agenda across many member-countries is the petroleum sector; hence, efforts must be made to refine crude oil and export it, Secretary General of African Continental Free Trade Area (AfCFTA), Wamkele Mene, has said.
Speaking at the virtual Ghana International Petroleum Conference, Mr. Mene said the availability of crude oil among some countries offers great advantage for the continent, as it will serve as a catalyst for the industrialisation agenda.
“Without value addition in the petroleum industry, the development of a beneficiation capacity in Africa, the trade that we seek to boost in Africa will not be achieved to the same level as we would if the petroleum industry was part of the value chain of Africa’s industrialisation. The petroleum industry is absolutely an integral part of Africa’s industrialisation.
“As we seek to develop the mineral’s beneficiation capacity on the continent, it is absolutely critical that we do so leveraging on the AfCFTA and the markets it opens in Africa. We in Africa must be more of a net exporter than a net importer of refined petroleum products.
“The petroleum industry is at the heart of Africa’s industrialisation objective. It is at the heart of dismantling this colonial economic model, so that we rely more on our own beneficiation capacity on the continent and contribute to Africa’s growth and prosperity,” he said.
The Secretary General further said the disruptions in supply chain caused by the pandemic should be a wake-up call for member-states to move away from the colonial economic model that is focused on import of raw materials from the continent, to adding value for exports.
“We all know that the African economy can be characterised as follows: smallness of national economies, lack of economies of scale, fragmentation of markets, and continuous exporting of primary commodities to countries of the north. In other words, the continuation of a colonial economic model wherein Africa continues, 60 years down the line, to export primary commodities to the rest of the world without value addition.
“All of these factors contribute to the very low intra-Africa trade relative to other regions. We in Africa trade more with the rest of the world than we trade among ourselves, and this is something that the AfCFTA seeks to change in the next 15-30 years’ time.
“We also observed that because of the disruptions in global supply chain, countries that are overly-reliant on the export of commodities suffered quite significantly. We as Africans should not be overly-reliant on global supply chains.
“We have learned our lessons from COVID-19 – to reconfigure the supply chains that we rely on so we are more reliant on Africa from a manufacturing, production and industrial point of view. With the AfCFTA, we have taken the first step toward establishing regional value chains that are truly integrated; and the first step toward developing Africa’s industrial capacity,” he said.
Vice President, Dr. Mahamudu Bawumia – also speaking at the event, said there is a need for member-states to team up in order to ensure free trade works in order to address the perennial unemployment rate across the continent.
“We are at an economic crossroads. One that needs teamwork to achieve the transformation of our economies for the betterment and sustainability of our people. With all our natural and human resources endowment, we risk an economic catastrophe with many of our teeming youth unemployed and angry if we fail to harness them productively to accelerate growth. That is our first worry.
“The COVID-19 pandemic and protectionist interventions by major suppliers to Africa is a wake-up call for African nations to cooperate more in building a self-sustaining continent. While national refineries may be commercially unsustainable in some cases, we should be cooperating in the development of regional assets – including refineries and logistical assets – to achieve the economies of scale required for commercial viability. This drives productivity and puts our able youth to work, which in turn preserves and enriches their dignity,” he said.
AfCFTA is set to become the largest free trade area in the world with a market of 1.2 billion Africans. It is expected that Africa’s combined GDP of US$2.5trillion will reach US$29trillion by 2050 riding on the back of AfCFTA and an expansion in intra-Africa trade from its very low base of 15 percent to 52 percent.
“AfCFTA provides industry with a perfect opportunity to contribute toward the realisation of a first-world Africa. As continental multilateral policies are formed, success will always depend on the operational framework and commitment of all actors,” Dr. Bawumia stated.
He said while AfCFTA is a decision of the Authority of the Heads of States of Africa, its success depends on the work of industry and collaboration between industry and bureaucrats at the implementation level.
GHIPCON 2021 was organised by the Ghana Chamber of Bulk Oil Distributors (CBOD) and the National Petroleum Authority (NPA) in partnership with the Ministry of Energy. The two-day programme was organised on the theme ‘Positioning Africa’s Petroleum Downstream for AfCFTA’.