Addis Ababa: Effective operationalization of the African Continental Free Trade Area (AfCFTA) requires significant advancements in both domestic and cross-border infrastructure, CEO of Development Reimagined, Hannah Ryder underscored.
According to Ethiopian News Agency, Hannah emphasized that despite facing various internal and external challenges, the continent has experienced notable economic growth. She highlighted the potential of the AfCFTA to drive structural economic transformation across Africa, asserting that all essential preconditions must be fulfilled to maximize the benefits of this pivotal initiative.
In a recent report, the African Economic Commission (ECA) said the implementation of the AfCFTA is progressing well with an ambitious target set to achieve tariff linearization for 97 percent of trade across the continent. However, the Commission noted that infrastructure deficiencies, inadequate transportation networks and border facilities remain to have been challenges, impeding the swift implementation of the AfCFTA. Hannah recommended that African countries prioritize addressing infrastructure deficits, which are crucial for enabling other economic activities.
Furthermore, she urged nations to bolster their manufacturing sectors, create a more favorable environment for foreign direct investment, and facilitate the seamless movement of people and capital. The CEO underlined the necessity of creating an enabling environment for both medium and large private enterprises, as well as nurturing the informal sector, adding that will play a vital role in Africa’s economy.
Additionally, she stressed that government and financial institutions should focus their infrastructural incentives on cross-border projects. Hannah noted that the perception of “African Risk” combined with infrastructural challenges in many regions, discourages foreign investment in the continent. Therefore, she called on all responsible stakeholders to take action to change this perception and guide Africa toward sustainable economic development through increased foreign direct investment.
She also urged African leaders to seek lower international debt costs through effective engagement at the international level with relevant bodies to easily finance development initiatives. Furthermore, the credit ratings of African nations require reevaluation, as the perceived risks associated with Africa do not warrant the high interest rates that these countries are compelled to pay on their debts. The default rate among African nations is significantly lower compared to the global average, which she attributed to the good repayment track record of these countries. Nevertheless, she pointed out that this positive performance has not been adequately recognized by international financial institutions and called for a change in perception.