AfDB: How the AfCFTA can help Africa regain momentum lost to COVID-19

The African Development Bank (AfDB) has released its African Economic Outlook report, emphasizing the need for Africa to adopt a competition policy that promotes regional integration and utilizes the African Continental Free Trade Area (AfCFTA). Khalid Sherif, Vice President for Regional Development, Integration, and Business Delivery at the AfDB, sat down with CNBC Africa to discuss the key takeaways from the report and how the AfCFTA can help Africa regain momentum lost due to the COVID-19 pandemic. According to Sherif, the focus of the report was to enable Africa to 'build back better post-COVID' by addressing the significant crisis caused by the pandemic. With 54 countries affected by COVID-19 in various ways, Africa is in need of financial support to recover. Sherif highlighted that while countries in the Americas and Europe received substantial stimulus packages totaling around $4 trillion, Africa only received a fraction of that amount, under $200 billion. The AfDB has provided approximately $5 billion in development assistance to help African countries address the economic downturns brought on by the pandemic and declining commodity prices. One of the key strategies to drive growth in Africa is the AfCFTA, which aims to boost intra-African trade and reduce the continent's dependence on imports. Currently, intra-African trade accounts for less than 15% of total trade on the continent, hampering economic growth and resilience. Sherif emphasized the importance of strategic industries, such as pharmaceuticals, that can supply essential goods like vaccines to support Africa's recovery from COVID-19 and future pandemics. The AfCFTA has the potential to transform Africa into an economic powerhouse, similar to the European Union, by fostering regional integration and unlocking economic gains. Addressing the issue of debt in Africa, Sherif highlighted the challenges faced by countries that issued euro bonds based on revenue projections tied to commodity prices. The sharp decline in commodity prices due to the pandemic has strained countries' foreign exchange reserves, making it challenging to service debt obligations. As debts begin to mature, African countries are at risk of facing a debt service crisis. Multilateral institutions like the IMF, World Bank, and AfDB are collaborating to find solutions to help African countries overcome the debt challenges caused by external shocks. In conclusion, Sherif underscored the importance of providing support to African countries to mitigate the impact of the debt crisis and facilitate sustainable industrialization. By leveraging the AfCFTA and enhancing regional integration, Africa can position itself for a resilient and prosperous post-COVID future. The AfDB remains committed to supporting Africa's recovery efforts and promoting policies that drive economic growth and development on the continent.