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Africa

Africa: Aligning AfCFTA and Agenda 2063 With FOCAC in Charting Africa’s Path to Economic Transformation

todayOctober 16, 2024 3

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Africa stands on the cusp of an economic transformation that promises to reshape its place in the global economy. Central to this vision are three powerful frameworks: the African Continental Free Trade Area (AfCFTA), Agenda 2063 and the Forum on China-Africa Cooperation (FOCAC).

Individually, each of these initiatives holds great promise for the continent. However, their alignment can unlock even greater synergies, accelerating Africa’s industrialisation, sustainable development and economic integration. By strategically harmonising AfCFTA’s trade objectives, Agenda 2063’s development goals, and FOCAC’s financial and technical support, Africa can drive a new era of prosperity.

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AfCFTA is the largest free trade area in the world by the number of participating countries, bringing together 54 African nations into a single market of over 1.3 billion people and a combined GDP of $3.4 trillion. Its primary goal is to eliminate tariffs on 90 percent of goods, increase intra-African trade by over 50 percent and foster economic growth. By creating a unified market, AfCFTA provides the ideal platform for African countries to industrialise, diversify their economies, and reduce dependence on raw material exports.

One success story is the Hawassa Industrial Park in Ethiopia, which focuses on textile and garment production. This facility employs tens of thousands of workers and exports its products to markets both within Africa and beyond. With significant investment from Chinese companies, the park represents how AfCFTA can stimulate value-added production, aligned with the goals of Agenda 2063 to promote industrialisation and sustainable economic growth.

Agenda 2063 is the African Union’s strategic framework for transforming Africa into a global powerhouse of the future. It envisions a prosperous continent based on inclusive growth, sustainable development and the eradication of poverty. Key to this vision is the development of infrastructure, modern agriculture and a vibrant manufacturing sector.

FOCAC has been a cornerstone of China-Africa relations since its inception in 2000, facilitating billions of dollars in investment in African infrastructure, industry and technology. China’s support for Africa through FOCAC has resulted in the construction of roads, railways, ports and power plants that are crucial for enhancing Africa’s trade and industrial capacity.

One of the most impactful projects under FOCAC is the Standard Gauge Railway (SGR) in Kenya, linking Mombasa to Nairobi and eventually to other parts of East Africa. Funded largely through Chinese loans, the SGR has significantly reduced transport costs and improved the efficiency of moving goods across the region. This investment not only supports AfCFTA’s vision of seamless trade across borders, but also directly aligns with Agenda 2063’s infrastructure aspirations.

In order to harness the full potential of these frameworks, Africa must focus on strategic alignment in several key areas. Infrastructure is the backbone of economic development, and its improvement is essential for realising the benefits of AfCFTA and Agenda 2063. Chinese-backed initiatives like the Doraleh Multi-purpose Port in Djibouti and the Lekki Free Trade Zone in Nigeria demonstrate how FOCAC can facilitate the development of trade hubs that reduce logistical bottlenecks.

Moreover, Africa must invest in industrial parks and manufacturing hubs, like Ethiopia’s Hawassa Industrial Park, to transform its raw materials into finished products. By focusing on sectors such as agro-processing, textiles and pharmaceuticals, Africa can not only meet its own needs but also compete globally.

Agriculture remains the backbone of many African economies, yet it often lacks the necessary investments to transition from subsistence farming to commercial production. Through FOCAC, China has established Agricultural Technology Demonstration Centers in countries like Kenya, Nigeria and Mozambique. These centres have introduced innovative farming techniques that have significantly increased productivity and food security.

Energy is a critical component for industrial development and trade. The Grand Ethiopian Renaissance Dam, expected to generate over 6,000 megawatts of electricity, is a prime example of how Africa can achieve energy self-sufficiency. Although not directly funded by China, the development of such projects aligns with FOCAC’s focus on infrastructure and energy cooperation.

With China’s expertise and investment capabilities, FOCAC can further support renewable energy projects across Africa, including solar, wind and hydroelectric power. Expanding energy infrastructure will ensure that industries have reliable and affordable power, a necessity for supporting AfCFTA’s industrialisation and trade goals.