‘New country business index to assess constraints to regional trade’

Though the recently launched African Continental Free Trade Area (AfCFTA) is expected to be a game-changer for Africa and a key engine of economic growth, industrialisation and sustainable development of the continent in line with the African Union (AU) Agenda 2063, the regulations and policies which undermine the functionality of market institutions need to be identified and addressed.

To this end, the United Nations Economic Commission for Africa (UNECA) has proposed the establishment of an AfCFTA Country Business Index (ACBI) that will be used at country level to assess and monitor constraints faced by the private sector as they trade in Africa.

The rationale is that private businesses are the target beneficiaries of the AfCFTA – it is them that actually trade across borders to whom the AfCFTA should serve.By putting the private sector at the heart of monitoring the effectiveness of the AfCFTA, the ACBI will encourage countries to effectively implement the AfCFTA in the interest of those for whom it is designed.

According to UNECA, having such an index that assesses and monitors trade enabling factors (including tariffs and non-tariffs measures) and induced costs faced by private sector operators will help to deepen the implementation of the AfCFTA.

Through the elimination of tariffs and the removal of non-tariff barriers, the AfCFTA is expected to address the fragmentation of African markets and support the creation of a conducive business environment for intra-African trade.

Businesses currently face many constraints including high trade costs, divergent regulatory frameworks and governance issues that undermine their effective operations on the African continent.

These bottlenecks are expected to be addressed by an effective implementation of the AfCFTA Agreement. There is therefore a need to develop tools and instruments that help countries capture the effectiveness of measures undertaken to implement the AfCFTA with a view to increase business competitiveness.

The proposed ACBI, according to UNECA, intends to be a robust and unique tool for measuring and monitoring businesses’ experience with AfCFTA implementation at the country level, including identifying shortcomings and ways in which implementation can be improved.

“The Index will allow for cross-country comparisons to reward countries that are doing well in effectively implementing the AfCFTA, and through doing so encourage countries to develop a more conducive enabling business environment throughout the continent. It will ultimately be a tool to facilitate decisions making that will in turn sustain business and trade within and beyond Africa.

“It will further contribute to better understanding the challenges that the private sector operators and traders of various sizes face when trading across borders in Africa; especially by filling the gap in terms of information available to policymakers and businesses in Africa, considering the poor coverage of existing data. The Index will also provide the private sector with a tool for articulating their challenges to policy-makers”, UNECA added.