Ways Africa can reduce its reliance on Europe – AfCFTA Secretary-General

The Secretary General of AfCFTA, Wamkele Mene has said that African countries will reduce their reliance and other Western countries by boosting intra-Africa trade.  

He stated this while giving a keynote address at the 2023 Zenith Bank International Trade Seminar on Non-Oil Export themed: “Nigerian Non-Oil Export Industry. The Present, The Future”. According to him, economic diversification must also be the major objective for Africa’s intra-trade activities to increase their contribution to the global GDP. 

While highlighting the huge trade deficit between Africa and the rest of the world, Mene said: 

• “Economic diversification must continue to be Africa’s objective to reduce national resources accounting for the greatest share of export earnings in government revenue.” 
• “55 countries in Africa contribute only 3.1% to global GDP and only 2.2% to global trading output and yet a country such as Singapore contributes over 6% to global trade and output.” 

Wamkele stressed that the trade deficit is an opportunity for Africa to accelerate national development, and global competitiveness and also create jobs. 

Food Security in Africa 

On food security in Africa, Wamkele noted that intra-African trade would help Africa reduce its dependency on others and make the continent less vulnerable to geo-political crises in the world. 

• “The lack of economic diversification often results in increased vulnerability to external shocks and these vulnerabilities undermine prospects for longer-term economic growth.” 
• “Up to 35% inflation impressions on food prices in Africa as a result of the current geopolitical and economic context between Russia and Ukraine that has absolutely nothing to do with the African continent and yet has produced an adverse impact on food security in Africa”. 
• “President Kagame reminded us the other day that a country of 43 million people in Europe is feeding a continent of 1.3 billion people. We must take action to reverse this dependency of Africa on others whether it is for our food security or indeed our public health”. 

He went further by saying that the trade rules and patterns that existed for decades have limited the ease of intra-trade activities within Africa and that the continent should not have a challenge of food insecurity crisis when there are countries in Africa such as Zimbabwe, Ethiopia or Uganda that can feed the continent.  

He also noted that the fundamental objective of the AfCFTA is to eliminate the barriers to intra-African trade so that the continent can respond to its own needs. 

Pan African Payment & Settlement System 

Wemkele also highlighted the progress the AfCFTA has made to smoothen intra-trade activities as he noted that there is now a uniform rule of origin on trade engagement. 

He said AfCFTA has partnered with AU and Afreximbank to introduce a Pan African Payment & Settlement System to make sure Africa now trades in local currency as against US Dollar. According to him, this system would help reduce the cost of intra-African trade. 

AfCFTA Smart Portal 

Wemkele on behalf of AfCFTA signed a MoU with Zenith Bank to build a smart portal for trade on the continent. Zenith committed $ 1 million to fund the single portal for trade information in Africa. 

He commended Zenith Bank for coming up with the idea of a smart trade portal for Africa and for funding it to the tune of $1 million.  

• “Zenith Bank was the first bank to come to me to say we want to partner with you. We went to see the chairman and the Chairman said that Zenith Bank wants to make a contribution to digitize trade in Africa.  I’ve never been offered a million dollars before; it was the first time when he said here is a million dollars.” 
• “The chairman said the one million dollars was to demonstrate the commitment as a bank to digitization in Africa. So, the portal wasn’t my idea; it wasn’t our idea at the AfCFTA Secretariat. It was Zenith Bank that stepped up and said this has to be done.” he said.  

Source: Ways Africa can reduce its reliance on Europe – AfCFTA Secretary-General – Nairametrics