The chief economist of the African Export-Import Bank (Afreximbank) on Wednesday argued that the African continent can be the world’s next factory, without the pollution handicap, by taking advantage of the free trade agreement.
“Africa can be the world’s new factory, without the negative constraints of pollution, an industry without chimneys,” Hippolyte Fofack said during the virtual conference “Africa’s Path to Globalisation”, organised by the US management school Thunderbird, as part of the Thunderbird Global Dialogues: Africa Edition Series.
In the speech, dedicated to the potentialities of the agreement on the African Continental Free Trade Area (ALCCA), which came into force in January this year and which aims to reduce customs tariffs across the continent, Fofack framed the agreement in the history of the continent, arguing that globalisation, an inevitable and irreversible process, has not benefited Africa.
“Globalisation has not worked for Africa, a region where colonial development models of resource extraction were detrimental, not letting the continent integrate into global value chains,” he argued.
Raw materials, he continued, are worth 80% of African countries’ exports outside the continent, which prevents these countries from reaping the benefits of globalisation, a process that has “globalised” and “globalisers”.
“The globalised countries are the countries that have lost out from globalisation, while the countries that have benefited most, such as the Asians, are the globalising countries,” Fofack said, stressing that the current agreement “can defragment African economies, create a market and integrate African economies into the global economy.”
African countries “have not changed the structure of the economy, as the trend of exports to the world, which continues despite fluctuating destinations, has undermined regional integration, resulting in 70 percent of the world’s poor being in Africa.
Among the main proposals for making the FTAA profitable, Fofack listed the creation of industrial parks and special economic zones, the reduction of bilateral agreements and an increase in protocols made on the basis of the agreement’s rules, the acceleration of technology transfer as opposed to just investment and the diversification of sources of economic growth.
“Industrialisation and structural transformation of our economies will take time, but we have the potential to be a globaliser and not a globalised one,” he concluded.
The FTAA agreement came into force on January 1, with the aim of facilitating cross-border trade by reducing or eliminating customs barriers and making the movement of people and capital simpler and promoting investment and industrialisation on the continent.
The free trade agreement in Africa creates a single market of 1.3 billion people with a Gross Domestic Product (GDP) of $3.4 trillion, and covers the vast majority of African countries.
