Trade Experts Highlight Role for AfCFTA in Economic Recovery of African Continent | News | SDG Knowledge Hub

An event titled, “Exploring the African Continental Free Trade Area and the Resilient Economic Recovery” and organised by the Overseas Development Institute (ODI) and Tulip Consulting, centred on exploring the resilient economic recovery in the African Continental Free Trade Area (AfCFTA). The session outlined how the AfCFTA is expected to bring significant economic benefits to the continent, boost human development, and build intra-African value networks. It was emphasised that the AfCFTA must be a growth lever in an era of increasing environmental degradation and climate change. The discussion focused on the strategic implementation of AfCFTA protocols and ongoing discussions related to the creation of a green economy.

This event took place as part of IISD’s TRADE + SUSTAINABILITY HUB. The event took place from 1-3 December 2021, and convened over 50 partners, 150 speakers, and 1800 registered participants from civil society, government, business, and international organizations to discuss how to ensure trade policies contribute to sustainable development. The Hub was scheduled to coincide with the World Trade Organization’s (WTO) Twelfth Ministerial Conference and took place virtually despite the last-minute postponement of MC12. 

David Luke, Professor at the London School of Economics, emphasised the need for increased investments that reduce carbon emissions and build resilience to drive productive capacity, create jobs and foster inclusive economic growth. In addition, he highlighted the role of the African green stimulus program, which seeks to harness the opportunities for a green recovery through a more coordinated approach and the scaling up of resource mobilisation, capacity building, and technology development across the continent. Complementary to this is the 2020-2026 African Union Green Recovery Action Plan (GRAP), which aims to tackle the combined challenges of the Covid-19 recovery and climate change, focusing on priority areas such as climate finance, renewable energy, resilient agriculture, and green cities.

Stefania Lovo, Associate Professor, University of Reading, underscored five key areas where policy can promote the green industrialisation process in Africa. First, improving electricity supply through renewable energy and incentivising the production of low carbon energy sources. Second, facilitating the transfer to greener technology by increasing access to financial resources. Third, promoting new technologies such as the collection of real-time pollution data. Indeed, the enforcement of environmental regulations and monitoring of pollution has been challenging due to the high cost of acquiring information on pollution and weak institutional capacity. Fourth, policies should improve transportation infrastructure and make transportation more sustainable, as transportation infrastructure has been a significant constraint to economic transformation in Africa. Finally, policies should promote training programs that improve managerial skills, as good managerial practices have been associated with higher productivity, low energy intensity and reduced waste.

Jodie Keane, Senior research fellow, ODI, addressed the importance of strengthening value chains to support resilient economic recovery objectives for African countries. Furthermore, she noted that environmental considerations and climate change have not received much attention within the AfCFTA, although some provisions could support resilient recovery objectives. Keane recalled that climate change has created challenges for many African countries and that, given the nexus between climate change and trade, it is key to consider how the AfCFTA can support the implementation of Nationally Determined Contributions (NDCs) while providing access to climate finance.

The need to devise mitigation actions to tackle climate change impacts in Africa was also emphasised by David Luke, who suggested that an additional AfCFTA protocol on sustainable development would help advance green growth on the continent. The protocol on competition policy can also play an important role, by ensuring competition policies support green innovation without environmental regulations harming competition.

Regarding renewable energy, Stephania Lovo called for removing fossil fuel subsidies which artificially make clean energies less competitive and hence disincentivise much-needed investments in the sector. She also pointed to the potential of the AfCFTA as a venue for discussing environmental policy, towards progressively harmonising environmental rules and standards on the continent.

This article was authored by Hiral Ramesh Hirani, CUTS International