By VINCENT OWINO

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The Africa Continental Free Trade Area (AfCTA) agreement could be the continent’s Marshall Plan for recovery as the region faces a further economic disruption from the Russia-Ukraine war.

Economists from the UN Economic Commission for Africa (ECA) say the continent must now implement the agreement fast as it presents insurance for the future.

The experts had this week gathered for a webinar convened by the East African Business Council (EABC) to discuss the turmoil caused by Covid-19 as well as the Russian invasion of Ukraine.

Mama Keita, the director of ECA sub-regional office for Eastern Africa noted that “Africa’s recovery has been hindered by higher inflation, tighter global financial conditions, rising interest rates and the Ukraine crisis further compound the situation.”

ECA says the Ukraine crisis has exacerbated the economic and social vulnerabilities of African states, with food, oil and fertiliser prices reaching 14-year highs.

The crisis has caused a 75 percent rise in crude oil prices, 67 percent rise in wheat prices, and 52 percent rise in maize prices. Fertiliser prices have risen by 21 percent since the war began.

ECA projects that the Ukraine war will further contract Africa’s real GDP growth by 0.7 percent in 2022, raise inflation by 2.2 percent and drive 43 African states into fiscal deficit stress.

This is after the pandemic contracted African economies by an average three percent, increased their debt burden by about 10 to 15 percent of GDP and pushed over 47 million Africans into extreme poverty.

Marshall Plan

The experts now suggest that the gains from AfCFTA alone could hasten Africa’s recovery and improve economic performance.

They called it the Marshall Plan for Africa, taking the name from the post-WWII plan by the US for Europe. Introduced by then Secretary of State George C Marshall, the $15 billion plan was to help rebuild Europe from war by reducing trade barriers, improve factories and shield it from communism.

The officials think reducing barriers alone for Africa is critical.

“AfCFTA is set to increase Africa’s real income by seven percent to $450 billion and intra-African trade by 81 percent by 2035,” said John Bosco Kalisa, EABC chief executive.

According to ECA estimates, AfCFTA will increase volume of exports by 29 percent and lift over 60 million people from extreme poverty.

In Eastern Africa, AfCFTA is estimated to yield $35 billion welfare gains and create eight million new jobs.

Further, businesses will enjoy increased productivity, returns to scale, more value addition, and increased investment, which are expected to spill over to consumers who will have access to wider range of quality products and services at lower costs.

According to the UN Conference on Trade and Development, in 2021 intra-Africa exports were the least at 18 percent of all exports, compared to Europe (68 percent), Asia (58 percent) and North America at 30 percent.

Since commencement of trade in January 2021, AfCFTA has not been fully implemented across the continent. Mr Kalisa urged states to fully eliminate non-tariff barriers and encouraged the private sector to get involved in the implementation of AfCFTA strategies.