The $2.5 trillion African economy: Why a borderless Africa offers best hope for unleashing the continent's potential

17 December 2019

Written by Dr. Mukhisa Kituyi, Secretary-General of UNCTAD

At a time when the multilateral system is “under siege,” and media speculation about Brexit and whether the European Union is in decline is widespread, the African Union is quietly deepening economic, social and political ties.

Africa has embarked on a journey of transformational change: while the international media may be portraying a dismal picture of Africans as refugees fleeing the continent on boats, the reality on the continent is much different.

Economic integration is progressing on the continent. The signing of the African Continental Free Trade Agreement (AfCFTA) in January 2018 and ongoing ratifications by 27 countries so far, is an important development milestone for the continent.

It has taken Africa almost 30 years since the signing of the Abuja Treaty in 1991 to reach this stage. But the Continent cannot afford to wait another 30 years to translate the AfCFTA and the potential it holds into reality.

The African Union single passport for all Africans 
The African Union has launched a single passport for all Africans

Africa’s success at augmenting economic prosperity for all on the continent will depend critically on its capacity to transform the AfCFTA into a catalyst for structural change and prosperity.

While the rest of the world has often felt captive to trade tensions between the world’s two largest economies, since July 2019 the 54 members of the African Union have entered the operational phase of the AfCFTA putting into action far-reaching plans to tear down barriers to trade and mobility on the continent. With further alignment and improved coordination, the AfCFTA has real potential to foster the development of robust regional value chains, which could increase intra-African trade.

UNCTAD’s 2019 Economic Development in Africa Report: Made in Africa, rules of origin for enhanced intra-African trade notes that the establishment of the AfCFTA could lead to a reorientation of trade towards the regional market, associated with significant overall welfare gains, output and employment expansions in the long-run.

In fact, welfare and output gains could be significantly enhanced in the long-run, if AfCFTA negotiations also effectively address not just tariff-related issues, but also Non-Tariff Barriers -- such as trade facilitation issues, sanitary and phytosanitary measures, and rules of origin. These additional barriers restrict trade and unduly constrain the emergence of viable regional value chains.

Overall, the relative sophistication of intra-African trade suggests that the regional market may offer a greater – and so far, largely untapped – scope for supporting economic diversification, provided that the AfCFTA is approached and implemented as an opportunity to enhance the consistency of Africa’s trade policy framework and the continents structural transformation agenda.

The new Pan-African agenda goes beyond trade and value chains, however, and includes free movement of African citizens across borders for both work and leisure travel. The African Union (AU) passport aimed at facilitating the free movement of people on the continent is beginning to gain momentum, as well. According to the African Development Bank’s 2019 Africa Visa Openness Report, African visitors no longer need a visa to travel to a quarter of other African countries, whereas visa-free travel was only possible to a fifth of the continent in 2016. Currently, 21 African countries also offer e-Visas to make travel more accessible, up from 16 in 2018, 13 in 2017, and 9 in 2016.

Africa’s airspace are going borderless, as well, with significant progress on the AU Single African Air Transport Market initiative launched in 2018. Signed by 23 countries it also makes it easier for Africans to travel across the continent. These initiatives help to address barriers to achieving a borderless Africa, driving Africa’s growth and regional integration.

But this wider scope of borderless Africa can also go further in countering the false narrative around African migrants. With deeper regional integration and cooperation, African countries must improve their migration management by developing tools and capabilities to more effectively measure migration, including immigration into the continent from abroad, and diaspora engagement through trade.

UNCTAD’s 2018 Economic Development in Africa Report: Migration for Structural Transformation shows that international migration in Africa is primarily a continental phenomenon, contrary to popular perception. In 2017, more than half – 53 per cent of Africa’s international migrants resided within the continent, many of them circulating within the same African region. For many Africans, migration offers a chance at a better life for migrants and their families, with benefits extending to future generations and spanning both countries of destination and of origin.

Countries of destination for African migrants fill critical skills gaps, as well as benefit from improved productivity and increased output. Cote d’Ivoire – a leading migration destination on the continent, has reaped significant benefits from international migration. In 2008, international migrants’ contribution amounted to almost a fifth (19 per cent) of Cote d’Ivoire’s GDP.

Africa’s international migrants often acquire skills in destination countries that enable them to earn higher incomes and create better livelihoods for themselves and their families. For example, low-skilled migrant farmers from Burkina Faso, for example, gain new skills in Cote d’Ivoire that allow them to engage in higher-skilled occupations that offer better paid and more stable employment.

Migrants’ countries of origin gain from remittances, diaspora investment, along with nostalgia trade generated by migrants’ demand for products from their home countries, and from knowledge, technology and skills transfer from return migrants. For many African women, opportunities in domestic service, informal trade, retail and other services have enabled them to earn incomes that improve their livelihoods, support their families and contribute to poverty reduction.

Eliminating regulatory restrictions that hinder migrants from taking advantage of these opportunities is paramount for realizing the benefits of a borderless Africa. Recognizing low and semi-skilled migrants’ qualifications can enhance their employment prospects and mitigate deskilling – a challenge that some migrants face in destination countries. The removal of preferences for nationals in Morocco, and Rwanda’s temporary visa (H-4) for semi-skilled migrants, are examples of measures that have enabled international migrants to take up employment legally and integrate in labour markets on the continent.

Ensuring legal protections for women who often work in vulnerable, unregulated employment in domestic service, informal trade and other services, and tackling gender-related security risks that inherently affect women’s migration journeys are also crucial.

Borderless Africa stands to reap further benefits from closer trade, industry and migrant links among African countries. The geopolitical moment is opportune, the economic case is solid and the domestic political stars seem aligned in most African countries. The time is now to capitalize on this potential for Africa’s youth to benefit from this $2.5 trillion promise.

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