IFC: AfCFTA is becoming a lot of talk — we need to fix regulations

Makthar Diop, the managing director of the International Finance Corporation (IFC), says the Africa Free Trade Continental Agreement (AfCFTA) is becoming a lot of talk, and may not become a reality if laws and regulations are not fixed.

Speaking at the World Bank/ International Monetary Fund (IMF) Spring meetings in Washington DC, the IFC MD said it is easier for a Nigerian businesswoman to do business with Europe than to do with other African countries.

“If you are a Kenyan businessman or a Nigerian businesswoman and you want to be part of the same [Africa] supply chain, it is much harder for you than being part of the supply chain of Europe,” he said. 

“This is a reality that we trying to tackle. It means a certain number of things; local currency, capital markets, being able to swap currency between African banks, we need to have the regulations,” he said.

He noted that the IFC is creating an alliance with the World Trade Organisation (WTO) to fix the issues, warning that if that is not done, the AfCFTA may never become a reality.

“We need to have the laws, and you cannot have all these done if WTO is not there to ensure and help build the capacity for the dialogue for this regulation,” he added.

“So, what we are seeing here is really a very close collaboration between the two institutions. And I can tell you that if we manage to move things in that direction; that is the only way we will be able to make the Africa Free Trade Continental Agreement a reality. Otherwise, it is becoming a lot of talk, but it will not be a reality, we will not see more trade. 

“People have been focusing, a lot on physical investment; ‘oh we don’t have enough road’. This is true. But the problem is that even when you have these physical infrastructures, you don’t see the trade because people don’t have the means to trade.

“This is why Dr. Ngozi (Okonjo-Iweala) has been really pushing us to work; and I think right now we have a really strong alliance and we would like to bring more people to work with us.”

The African Continental Free Trade Area (AfCFTA) has the potential to increase intra-African trade from 18% of total trade to 50% by 2030.