PwC Nigeria, a professional services firm, has advised the federal government to build a strong digital economy that can foster the production of higher quality goods and services at reduced cost in order to be able to withstand the competition that would arise under the African Continental Free Trade Area (AfCFTA) in the post COVID-19 era.
The PwC gave the advice in its latest report titled: “COVID-19 and the African Continental Free Trade Area Agreement,” adding that a strong digital economy would open new channels for value addition and broader structural change in the Nigerian economy.
The global accounting and auditing firm said the government need to review its information technology plan in line with economic digitalisation before trading in the AfCFTA would begin in 2021 because it is now clear that globalisation has gone online.
The report added: “One important question Nigeria must ask in these uncertain times is how its digital economic strategy – the National Digital Economy Policy and Strategy (2020-2030) proposed by the Ministry of Communication and Digital Economy and The Smart Nigeria Digital Economy Project proposed by the Nigerian government can sustain economic interactions and development in the face of a pandemic.
“The AfCFTA will be competitive and countries like Egypt with three active digital strategies (National E-Commerce Strategy, Strategy for Social Responsibility in ICT, and Digital Arabic Content Strategy) would have an edge over countries in the market with weak or no digital framework to support trade in goods and service within the market.”
It also highlighted that only countries that could get its digital development requirements could compete effectively within the AfCFTA and recommended the need to, “develop and upgrade the digital infrastructure, digital financial services, digital entrepreneurship and digital skills that are thematic pillars of the Digital Economy for Africa (DE4A) to encourage trading digitally across individuals, SMEs and governments.”
The PwC warned that AfCFTA should not be slowed down because of its potential to serve as the continent’s effective shock absorber if the global economy remains depressed by the pandemic and its uncertainty.
“This is a good time to start implementing the AfCFTA. With the birth of AfCFTA, a strong commitment and joint action by the continent’s leaders would undoubtedly benefit the fight against the pandemic and its economic consequences for Africa post COVID-19,” the PwC said.
It also urged the African governments should seek ways to convert the challenges posed by the COVID-19 pandemic disease to opportunities that could create stronger economic and political integration in the continent as a way of forestalling the possible negative impacts the pandemic would have on the implementation of the AfCFTA.
The report noted that the risks posed to the continental project by COVID-19 could be turned it into an opportunity for stronger collaboration, if signatories to the agreement would quickly pursue certain policies that would foster self-sustainability in food security, education, healthcare and logistical services.
The PwC advised against the closures of borders because of the negative signal it would communicate on the progress of the agreement and suggested that governments could reduce human flows while keeping borders open to key goods and services required for national development and economic sustainability.
“In this case, border management agencies are tasked to ensure movement across borders met the business and economic criteria set by the Nigerian government. This will signal continued belief in the importance of economic activities and trade in provision of goods and services that people need to continue their daily lives,” PwC stated.
The AfCFTA is expected to facilitate trade in goods and services through free movement of persons in order to promote and expand economic integration in line with the African Union Agenda 2063.
However, some of the negative impacts COVID-19 on the free trade agreement, according to PwC, include the introduction of border closure and travel bans by key African economies, which have undermined the process of strengthening economic integration and economic development in Africa.
Moreover, the spread of the pandemic in the continent has put all negotiations on the Rule of Origin and tariff concessions that are necessary for trading under the agreement to begin at a halt as member countries focused on saving lives and preserving livelihoods.