Brics 2023 focus: AfCFTA – Moneyweb

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JIMMY MOYAHA: The Brics Summit officially kicked off with some conversations today. Moneyweb journalist Ntando Thukwana was able to get some very interesting comments from the Secretary-General of the African Continental Free Trade Area [AfCFTA], Mr Wamkele Mene. We have a copy of that clip taken today. We’re going to play that and hear what the secretary-general had to say and what tone that had to set for some of the other Brics conversations today.

NTANDO THUKWANA: Today saw the kick-off of the 15th Annual Brics three-day long summit that will end on Thursday. State representatives and business people from Brazil, Russia, India, China and South Africa gathered to discuss and exchange ideas on how to best accelerate trade among themselves and get growth going. This is particularly important because they want to lessen the reliance on Western powers.

This bloc represents a quarter of international trade and also contributes 30% to the entire globe’s GDP.

Some of the conversations that took centre stage today were about trade and investment challenges and solutions for the agricultural sectors of these nations. They also touched on the importance of leveraging technology to deliver a Just Transition, and some conversations also touched on small businesses and where they feature – especially for these nations where small businesses are considered growth accelerators.

We caught up with the Secretary-General of the African Free Trade Area, Wamkele Mene, and this is what he said.

WAMKELE MENE: It’s very important because if you look at the economic profile of the Brics countries, their contribution to global trade, their contribution to global GDP, it is a very significant part of the global economy.

And so as the Brics countries deliberate over the next few days my hope – and I believe that this will be the case – is that there will be as part of the outcomes a greater engagement with the rest of the African continent in terms of trade and investment.

Brics countries should consider the AfCFTA to be an opportunity to expand their markets, to expand into new and dynamic areas of cooperation that the AfCFTA presents. So I think that’s a very critical acknowledgement – the fact that the theme has been crafted in this manner and that, as you mentioned, so many African countries have been invited.

NTANDO THUKWANA: Mene also spoke about the importance of increasing intra-Africa trade, as well as resolving some of the barriers such as infrastructure that make connectivity between African regions difficult. At just over 16%, intra-Africa trade is at levels just too low.

WAMKELE MENE: Well, the infrastructure is a significant barrier to the intra-Africa trade connectivity of regions across the continent.

Another big challenge, of course, is the lack of free movement of persons.

As you may be aware, only four countries have ratified the protocol on free movement of persons, and free movement of persons is critical to driving trade and business and investment across regions. These are the barriers.

The AfCFTA has taken steps to resolve some of these barriers. For example, as you know, intra-Africa trade is very low.

With the timelines that have been set for the elimination of duties and tariffs, we hope that in 10 years’ time we will double the percentage of intra-Africa trade by reducing these barriers that have existed for so long for investment, for trade, for competition policy – all of the areas that have now been included as part of the agreement which the negotiations have proved very, very clearly that there is a commitment to tackle this big challenge that has existed in Africa for the last 60 to 65 years.

NTANDO THUKWANA: We also asked Mene about the power crisis in Africa’s most industrialised country, and what its impacts are on trade on the continent.

WAMKELE MENE: I’m reluctant to respond to your question. What I can say is that the government of South Africa is taking all of the steps, the necessary steps, to make sure that the energy insecurity crisis is resolved in the shortest period of time.

Obviously South Africa is a very important part of Africa’s economy from an industrial output point of view, and so everybody has an interest in the energy crisis being resolved as soon as possible. As to the actual strategies that the government has adopted, I would leave that to others to express a view about.

Well, we are not faced only with an energy crisis, but we’re also faced with a crisis of instability.

There’s a coup d’état in Niger, there’s a Civil War in Sudan. So we are facing a number of challenges at multiple fronts, but we have to be resolute and confront these challenges.

So I believe that if you look at the continent as a whole, we have made progress on a number of fronts. On some fronts we are moving backwards but, in general, given the political momentum for the AfCFTA, I think we’re making good progress.

There will always be headwinds of one sort or the other. There will always be geo-economic tensions. There will always be a Covid-19 pandemic that disrupts global supply chains. These challenges will be there.

We simply will have to confront them and devise strategies for enabling resilience, as we have done in the case of Covid-19.

You will know that in March 2020, only between 5% and 7% of Africans were vaccinated at that time. But the continent moved at a very fast accelerated pace to develop capacity to ensure the public health of Africans, to ensure access to vaccines.

So I’m saying that clearly this was a challenge, but the African continent was able to quickly respond and deploy interventions that made a difference, that saved millions and millions of Africans’ lives.

I will leave it for Brics countries to express a view as to the issue of the single currency. What I would say is that, as the African Union and as the AfCFTA, we have timelines for eventually introducing an African currency – which I believe will happen. Of course there are challenges that will have to be confronted.

Read: Brics latest: Reducing dollar reliance in focus, currencies gain

Macroeconomic convergence is the biggest challenge that we will have to confront, but it is there.

One of the founding instruments of the OAU [Organisation of African Unity] is that Africa must have a single currency. So we’re moving towards that. As to when it can happen, I do not know.

But in the interim we have introduced the Pan-African Payments and Settlement System, which will enable trade in Africa to happen in local currency on a digital platform.

NTANDO THUKWANA: That’s what went on on day one of the 15th annual Brics Summit, which will continue over the next two days. Delegates will keep their eye on the ground, particularly around that conversation regarding introducing a common currency that will have the Brics nations rely less on the dollar, as well as expanding the trading bloc to include other countries, especially in Africa. There have been 20 countries that have expressed interest and delegates will be keen to hear what the latest developments will be.

For Moneyweb, I am Ntando Thukwana, reporting live from the Brics Summit in Sandton, Johannesburg.

JIMMY MOYAHA: Ntando Thukwana was giving us a sense of a conversation that took place with the Secretary-General of the African Continental Free Trade Area, Mr Wamkele Mene.

That’s just part of the agenda that we know has been outlined for this particular summit. If you take a look at Brics2023.gov.za, there is a detailed sort of announcement around the themes and priorities of this particular summit and what it aims to achieve. The African Continental Free Trade Area is just one of the themes that is highlighted on that page.

There’s also the conversation around transforming education and ensuring that there is skills development in the future. There are aims around strengthening the post-pandemic socioeconomic recovery and attainment of [the] 2030 Agenda on Sustainable Development, which is quite interesting because that is put alongside the development of a partnership towards an equitable Just Transition.

We know that at the start of the year when we got the State of the Nation address, President Ramaphosa said that the Just Energy transition plan was well in effect, and would need to come into focus in an effort [not only] to end load shedding in South Africa, but also to ensure energy stability both within South Africa as a country and within the continent.

And we saw, ahead of the summit kicking off today, there was an agreement signed between the China State Grid Corporation and the South African – I think – Ministry of Electricity, or the South African government, in China’s effort to help South Africa deal with the energy crisis that we’ve been dealing with, and make sure that we find equitable solutions around this.

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One of the other points that was mentioned by the Secretary-General of the African Continental Free Trade Agreement was the conversation around the tensions in Niger. Obviously that has some sort of spillover effect if you think about Niger’s positioning and the conversation that we know was ongoing between Europe and Nigeria around potentially having a new gas pipeline run from Nigeria, through Niger, into Europe now that the Nord Stream pipeline running from Russia has been jeopardised.

So interesting points that have come out up to now, and obviously some other points that will be of clear focus over the next couple of days – things around the friends of Brics or who we could be welcoming into the bloc – if we are to indeed add new members to the bloc – and what strategic advantages that would bring.

I know there were talks of potentially having countries like Saudi Arabia join the bloc, which would be a huge strategic advantage if you think about the Opec bloc and what control they have over the oil market around the world.

Obviously that conversation around a single Brics currency or a single African currency – or a combination of both – is something that we want to get insights on; there’ve been conflicting messages around that.

We also know that there was an interesting story about onions. There was an onion story about India increasing tariffs on the exporting of onions outside India as a country.

That’s obviously quite important for the Brics bloc because – if you have listened to any of the conversations – you get a sense of the theme being consistently ‘we are now needing to put the bloc first, the members of the bloc first, putting Africa first, putting India first, putting China and Russia and Brazil [first], putting the interests of emerging markets first, and no longer having emerging markets be the destinations for extraction of resources without any development’.

That was made very clear in [our] president’s statement on Sunday, which was quite an interesting statement.

I had the privilege of listening to that statement and you heard the president of South Africa for the first time in a very long time be very decisive and very clear around ‘these are the goals that we aim to achieve, and it’s time we put South Africa, Africa, and the Brics bloc first – not to the detriment of anyone else, but for the growth and the prosperity of the people of the continent’.

Whether or not we’ll be able to follow through on that remains to be seen but for now it is a positive sign to hear that that is a priority and taking centre stage.

The world is watching and it’s time for us to make sure that what we say we then follow through on.