Mitigating effect of COVID-19 in Africa with AfCFTA

The long-awaited trading within the African Continental Free Trade Area finally began on January 1, 2021, marking a very important milestone for African trade. AfCFTA creates a single continental market for goods and services, with the aim of increasing intra-African trade by reducing tariffs by approximately 90 per cent and harmonising trading rules at a continental level. It has the potential to increase intra-African trade by 52.3 per cent by 2022.

The Coronavirus Disease has inevitably delayed the implementation of the AfCFTA, when harmonisation couldn’t be more important as the world clubs together to fight the novel virus. Despite various regulations put in place by African governments to try and manage the spread of the disease, the pandemic continues to spread across the continent. According to the World Health Organisation, cases in the African region (excluding Morocco, Tunisia, Libya, Egypt, Sudan, Djibouti and Somalia) have been increasing significantly since mid September 2020. WHO noted one of the biggest challenges in Africa as the lack of essential products such as pharmaceuticals, Personal Protective Equipment, test kits and other medical supplies. As a result, most African countries heavily depend on imports from overseas for these essential products. The pandemic thus reveals the heavy import-dependency and vulnerability of Africa’s pharmaceutical sector, perhaps more so than any other industry. According to the United Nations Economic Commission for Africa, all African countries are net importers of medical products, as they import 94 per cent of its pharmaceuticals.

Ensuring availability and access to pharmaceuticals and PPE is not only essential to minimise COVID-19 cases, but also to manage societal expectations. The AfCFTA is an unmissable opportunity to mitigate the effect of COVID-19 by allowing the free movement of pharmaceuticals and PPE as well as free exchange of technical expertise.

The pharmaceutical industry in Africa is one of the fastest growing in the world, driven by a small number of countries such as South Africa, Nigeria, Ghana, some East African countries and North Africa. Thus, through AfCFTA, Africa has a great opportunity to boost intra-regional trade of pharmaceuticals and PPE. Presently, Africa manufactures less than two per cent of the medicines it consumes while importing about 70 per cent from outside the continent at approximately $14.5bn yearly. AfCFTA can, therefore, facilitate creation of an environment conducive to establishing regional value chains in pharmaceuticals, which can be leveraged as a springboard for up-and-coming African multinationals.

The production of pharmaceuticals in Africa is important, to tackle COVID-19 and local diseases where there is no investment for large foreign pharmaceutical companies. The economies of scale offered by AfCFTA mean that market size is no longer an obstacle for pharmaceutical manufacturers to engage in local production of generic medicines (for export on the continent), or pooled procurement of medicines.

African countries can also leverage AfCFTA to boost intra-regional trade through the harmonisation of standards, as well as collective bargaining with foreign drug suppliers in the short to medium run, and increasing investment in pharmaceutical production in the long run. African countries should take advantage of AfCFTA to accelerate implementation of the Pharmaceutical Manufacturing Plan for Africa and establishment of the African Medicine Agency. This should be a collective effort by all African countries through prioritising investment for regulatory capacity development; pursuing convergence and harmonisation of medical products regulation in regional economic commissions; and allocating adequate resources for AMA. With this in mind, UNECA, in collaboration with the African Union Commission, the African Union Development Agency, WHO, the Joint United Nations Programme on HIV/AIDS and the Inter-Governmental Authority on Development, launched an AfCFTA-anchored pharmaceutical initiative in 2019 to be piloted in Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Mauritius, Rwanda, Seychelles and Sudan. This adopts a three-pronged approach: localised production, pooled procurement, and harmonised regulatory and quality frameworks. With the coming into operation of AfCFTA, this collaboration must be implemented.

AfCFTA, as a united coherent bloc, should strengthen Africa’s ability to ensure Trade-Related Aspects of Intellectual Property Rights flexibilities are fully utilised in efforts to enable local production and access to essential medicines. In this regard, it is important that AfCFTA is compatible with TRIPS to ensure that it preserves the flexibilities of TRIPS.

African countries can also leverage regional industrial hubs within the continent to scale up production of pharmaceuticals and PPE. For instance, countries such Morocco, South Africa, Tunisia, Egypt and Mauritius have industrial and medical supply capacity, whose development can be accelerated through collaborations. Trade negotiators should thus ensure that medical supplies and PPE are not restricted within AfCFTA’s “excluded lists” and consider including health services as an additional priority sector for liberalisation under the trade in services negotiations. African countries must also fast-track the finalisation of rules of origin for PPE-related textile products under AfCFTA negotiations.

Further, there is substantial lack of technical expertise preventing African countries to fully tackle COVID-19 and its effect.

The AfCFTA agreement provides for easy and free exchange of technical expertise through the investment plans (i.e. national investment plans, investment promotion agencies, partnering to facilitate investment etc.), trade facilitation measures (such as standards certification and harmonisation etc.) and trade-related infrastructure measures (i.e., programme for infrastructure development in Africa).

These policies also assist in addressing the issue of infrastructure, which facilitates trade and economic growth in the continent. In conclusion, AfCFTA could be a major key to mitigate the effect of COVID-19 in Africa, should the countries and supporting industry utilise the benefits offered under the act.

* Mafongoya is legal intern at Centurion Law Group