The African Continental Free Trade Area, (AfCFTA), is finally on the table of every administrative public institution, African universities, African parliaments, embassies, strategic participating ministries, African state houses, AU headquarters, the United Nations Economic Commission for Africa, WTO, World Bank and the United Nations Conference on Trade and Development (UNCTAD) in Geneva. It is a document that facilitates intra-Africa trade and hence enjoys a flavour of appeal among the political elites of the continent’s 54 member states who ratified it.
Evidently, all African leaders are at the pinnacle of celebrating the actualisation of AfCFTA, as its operationalisation is long overdue and any attempt to whisper into the ears of those on the dancing floor to check their shadows as they dance in celebrating this achievement, is likely to get someone exposed to a nose flattening slap.
If Africa, is worth living for, then it must be worth dying for and this publication is designed to educate the African young professionals particularly in the fields of finance, investments, taxation and economics to expand their understanding beyond academic circles, so as to appreciate the meaning of knowledge and help in crafting policies that will save Africa from further economic abuse and poverty.
Will AfCFTA take Africa out of poverty and deliver the wealth that the continent wishes to achieve through Agenda 2063? Before answering this question, it is important to find out why Africa has remained poor. The principal focus for Africa’s poverty has historically been blamed on poor political leadership.
On the contrary, Africa’s economic demise and poverty is attributable to four very rare factors, not easily detected, to date, namely: (1) the lack of capacity to interpret fiscal investment regimes, (2) the lack of knowledge to understand the design of fiscal investment instruments, (3) the ratification and implementation of the fiscal investment instruments without effective administration protocols and (4) wrong choices in fiscal instrument ratification, OECD vs UN model fiscal instruments.
To justify the above factors, Africa is the only continent, which ratified fiscal investment instruments which are based on the OECD model, while the whole of Asia, ratified fiscal investment instruments based on the UN model and for this reason, the Asian continent experienced exponential growth over the last 50 years, while Africa, keeps shrinking in a foil of poverty, with a begging bowl.
Every year, Africa’s political leadership trek to the UN, to address the global assembly, with a principal theme of reminding the United Nations to accelerate the Millennium Development Goals and Africa’s desire to occupy a permanent seat on the Security Council being among the priority demands. For a period of close to 50 years, there has never been any demand from Africa at any given time to question, the UN to explain why the African continent is allowed to ratify fiscal investment instruments, which are based on the OECD Model and not on the UN model, as is the case with Asian nations.
It is none of the UN’s business, to explain itself for Africa’s wrong choices. The lesson to learn is clear that if you don’t know or understand what you are signing, and make wrong choices, you suffer generational economic consequences. The absence of this enquiry and failure to correct the wrong choices in 50 years is a clear signal that Africa is insolvent in understanding and interpreting fiscal investment instruments.
AfCFTA’s existence is to promote intra-Africa trade to an unprecedented 52.3% trade boost and realise a GDP threshold of more than $2.5 trillion from the continent, which is a fit for purpose objective and without any reservations, an imperative one. Whether AfCFTA will benefit Africa, is not a question requiring political will and response, it is a question requiring technical capacity to understand the character of the trade instrument itself.
How will Africa guarantee AfCFTA’s success if, for a period of 50 years to date, Africa cannot detect the difference between ratifying the OECD Model fiscal instrument and the UN model fiscal instrument and the resulting effects of the choice on her economy? AfCFTA is not different from other instruments that Africa failed to interpret for a period of 50 years and whose choice’s effects on her economy she has not been able to detect to date. The only difference is that the unfortunate OECD Model investment instruments are pure fiscal investment instruments, whereas AfCFTA is a combination of both free trade zone instrument and fiscal investment instrument. If Africa does not show the capacity to understand these two characteristics of AfCFTA and apply effective interpretation to its implementation, Agenda 2063 will be a poverty agenda for Africa, because the fiscal regime component of AfCFTA is what is going to place Africa in a perpetual poverty chamber. The effective delivery of AfCFTA will depend on Africa’s choice of interpretation and implementation, i.e. implementing it as a pure free trade zone regime or implementing it as a pure fiscal investment instrument or both. AfCFTA is NOT only a Continental Free Trade Area instrument, it is a Fiscal Investment Regime whose benefits to Africa depends on effective tailored interpretation and implementation protocols. That is what is in the Flamingo’s egg.
Are the global industrialised economies that depend on Africa for raw materials worried that AfCFTA operationalisation will disrupt materials supply chains in favour of intra-Africa trade? Not at all. They know that there is a sophisticated hidden fiscal investment regime within AfCFTA which Africa cannot detect, giving maximum benefits to the global industrialised economies and for this reason, AfCFTA ratification never signalled negative Stock Exchange share index adjustments for listed conglomerates in fear of material supply
disruptions.
Within SACU Common Monetary Area member states, the choice of ratifying OECD Model fiscal instruments ushered in more than 10 active fiscal regimes, which are harming the regional economies and attracting sustained junk status ratings out of which Namibia has a share of six active regimes that keep bleeding her economy, even before Covid-19. It is the hard truth and very real.