Continental Free Trade: Invest more in infrastructure — Ex-CBN boss

Charles Chukwuma Soludo-Former Governor of the central bank of Nigeria (CBN)

African countries must take concrete steps to improve and integrate their infrastructure, if the dream of a continental free trade area is to be achieved, Charles Chukwuma Soludo-Former Governor of the central bank of Nigeria (CBN), has said.

“We need to take concrete steps to make the free trade area happen, and what we need to do is invest in infrastructure,” he said at the inaugural K.B. Amissah-Arthur Economic Forum, held under the theme ‘Making Sense of Economics’, which came off at the Economics Department of the University of Ghana, Accra.

“The reason we are not trading among ourselves is not because we produce similar things; in Europe, several countries manufacture and sell cars among themselves and to other countries. We must invest in regional infrastructure and at the political level; it is not just signing of documents, we must get down to the basics,” he added.

The African Continental Free Trade Agreement (AfCFTA), an agreement advanced by the African Union (AU), is expected to create the largest free trade area in the world and is one of the flagship projects of the AU Agenda 2063, which is a long-term development programme urging closer African integration via facilitating the flow of goods and people throughout the continent.

It is believed that the AfCFTA, if fully implemented, could increase intra-African trade significantly and promote structural transformation by providing a lever to control industrial development in African economies.

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According to The Washington Post, by 2030 Africa may emerge as a US$2.5trillion potential market for household consumption, and US$4.2trillion for business-to-business consumption.

The treaty will result in a unified market of over 1.2billion people, with a combined gross product of over US$3trillion.

“We have ECOWAS passports, which is fantastic – but try travelling from ECOWAS to other parts of the continent and it will take you a minimum of three weeks to secure a three-month entry visa, while spending 1,000s of dollars to process that visa.

“Meanwhile, it will cost you a few hundred dollars to secure a two or three-year multiple entry Schengen visa. There are many things we need to remove before achieving free trade, because people must move around before we can develop as a continent,” Professor Soludo pointed out.

He added that the free trade area will open up the economies of Africa. Currently, he explained, sub-Saharan African economies are small – and even put together, several European countries are bigger. “Due to the small size of the economies of Africa, we need to integrate. Africa’s total trade accounts for only 3 or 4 percent of global trade.

“It is imperative to open up these small pockets of economies to create internal dynamism. Despite the fact that Africa countries are producing similar things, for now, they are still individual countries. When you open up and create the trade, the needed dynamic will begin to emerge,” he said.

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He added that Ghana is about the most stable country in West Africa, according to the Fund for Peace’s Fragile States Index; and with such enviable position, international firms might prefer to operate from Ghana and send their goods all over Africa.

“So, you might begin to attract some of those investments that otherwise you might not be able to, and it will also enable some places to specialise. People can then begin to think “If I am stationed here and I am able to move my goods across, why don’t I specialise in these specific areas instead of trying to do everything; and if some places are better-off producing banana, then why should we all produce banana when we can get it from the best place?

“The free trade area serves to bring together economic islands into potentially dynamic economies. The rest of the world sees Africa as one place, and economically we are tiny. So, part of what the free trade area will achieve is to open the doors, and then dynamics of the region can be maximised,” he added.

Stressing on fixing the infrastructure and opening up, Professor Soludo emphasised: “We must open up the borders and have connectivity among these countries, because if you produce in Ghana and it is cheaper to send to China or Europe than Nigeria, then the whole purpose is defeated”.

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