Namibia needs to be prepared well ahead of time to mitigate against the unintended consequences for the ambitious African Continental Free Trade Area (AfCFTA) by exploiting opportunities in the agreement. This is because regional integration such as the ambitious AfCFTA does have some unintended consequences although the overall and long-term benefits appear to outweigh the immediate sacrifices. Alternative import sources in Africa are likely to be associated with lower tariffs and therefore lower revenue collection for most countries.
These were the sentiments expressed last week by Bank of Namibia’s governor, Johannes !Gawaxab, at the bank’s 21st annual symposium. !Gawaxab said the removal of trade taxes might increase imports into Namibia and result in the displacement of Namibian industries by more well-established and efficient continental producers.
“While this switch may reduce the cost of living, it has implications for macroeconomic stability. This can be through the worsening of the balance of payments and more directly by putting pressure on the international reserves of the country, and an increase in the-already high unemployment rate,” cautioned the governor.
Furthermore, !Gawaxab said the role of banks for Africa’s free trade is essential, as finance is a critical lubricant in the trade facilitation process. He said the Bank of Namibia is ready to play its part in ensuring that cross-border transactions are done safely and efficiently.
“Our engagements with our stakeholders in this regard revealed that the speed and efficiency with which payments by traders are reconciled and cleared in the customs and payment or clearing interface system need to be improved as it impacts the turnaround time for businesses. These are some of the shortcomings that we need to urgently find solutions to,” outlines !Gawaxab.
In addition, he said banks are not only expected to mobilise savings and allocate capital funds required to finance productive investments, they need to step up their participation in trade finance.
According to him, innovation and development in trade finance must be undertaken if Namibia is to take advantage of the opportunities offered by the AfCFTA.
At the same occasion, Minister of Industrialisation and Trade, Lucia Iipumbu, said the implementation phase of the AfCFTA requires that member states establish relevant structures at a national level to support and oversee the operationalisation of the agreement.
She said for Namibia to fully appreciate the potential benefits of joining the AfCFTA requires a thorough assessment of the costs and benefits and the attendant adjustment to existing trade and investment policy frameworks as well as designing other complementary industrial and other related policies.
“The identification of potential challenges and opportunities is imperative as it allows us as a country to craft appropriate strategic responses. Also, it will allow us to ensure the existence of domestic capacity to best support the rollout and implementation of the AfCFTA,” she said.