Standard Bank Gets Behind AfCFTA To Drive Cross-border Growth In Africa

The African Continental Free Trade Area (AfCFTA) is a key opportunity for Africa to alleviate poverty, drive economic activity and achieve prosperity for her people, says Standard Bank, a key sponsor of this week’s African Continental Free Trade Area (AfCFTA) Business Forum in Cape Town.

By eliminating trade barriers and boosting intra-Africa trade, the AfCFTA aims to lift 30 million Africans out of poverty by increasing income across Africa, 7% by 2035. Once implemented, it will be the world’s largest free trade area.

“As Africa’s largest bank by assets, Standard Bank is committed to driving her growth and unlocking opportunities across the 20 markets we serve. In this regard, we support solutions that are Africa-centric and where the private sector plays a greater role in the health of local and regional economies. However, trade barriers and other protective internal policies remain stumbling blocks” says Philip Myburgh, Head of Trade for Business and Commercial Banking at Standard Bank.

Recent global supply chain disruptions illustrate the urgent need of building domestic value chains integrated into regional and global supply ecosystems. Standard Bank is optimistic about the benefits of a single market and wants to harness its broad networks and expertise on-the-ground to play a key role in helping AfCFTA take off.

“Standard Bank is building the finance and trade solutions to help address the tariff and non-tariff barriers required to realise the continent’s ambitions to create an effective single market,” says Myburgh.

Beyond aligning legislation and reducing red-tape, a more conducive environment for trade includes developing the manufacturing capabilities to beneficiate products and produce finished goods. This includes the ability to manufacture and construct the rail, road and port infrastructure required to move goods between and across vast territories.

Beyond hard infrastructure, access to trade finance remains a challenge. While banks are important players in financing trade across the continent, perennial risks continue to limit commercial credit appetite.

“In this environment, leveraging the ability of Africa’s financial institutions to deploy capital from development finance institutions and sovereigns into effective trade finance, especially for entities that have not yet built up their credit standing, could dramatically expand intra-African trade,” says Myburgh.

Other areas where banks and the private sector could work with the AfCFTA to begin implementation in 2023, is to identify and then co-operate on leveraging growth in high-potential sectors.

“In Africa, for example, agriculture is the bedrock, biggest earner, and greatest employer in many markets. Starting with small steps to improve the movement of food and agricultural goods, inputs, services and people could have a disproportionally large positive impact on social stability, growth, investment and national revenue across the continent,” advises Myburgh.

Energy and power infrastructure is another area where even limited cross-border co-operation and co-ordinated national investment could have a disproportionally high impact on regional and continental growth.

Free trade or special economic zones have also, to date, proved their worth as drivers of investment, production, and export earnings amongst African economies.

Importantly for Africa, and critically for the AfCFTA vision of a single African market, the continent’s booming digital ability, supported by a youthful population, presents another avenue for Standard Bank to provide the finance, guidance and digital platforms and connectivity to grow Africa’s digital revolution into a global investment proposition,” says Myburgh.

A significant non-tariff barrier in Africa is access to information and in response, Standard Bank has developed the Africa Trade Barometer, which blends qualitative and quantitative data from, initially, 10 of Africa’s leading trade economies. It provides a near real-time view of trade openness, access to finance, macro-economic stability, infrastructure, foreign trade, governance, economic performance, and trade finance behaviour in Africa.

“The secret to Africa’s success will be the power of partnerships, awareness of what is needed and access to trusted information, as no one can do it alone. The AfCFTA Business Forum is the perfect opportunity to get these partnerships off the ground and working to breathe life into the move to a single market,” says Myburgh.

“It is important that we use this opportunity to accelerate moves to a practical cross-border framework on which to build the institutions, systems and practices capable of uniting Africa’s business potential into a continental force for growth,” concludes Myburgh. 

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