What should happen for AfCFTA to be successful?

Now that the African Continental Free Trade agreement has gone live, Africans are expecting to see positive transformation within their economies and tangible benefits from a single and open market. For example, prices are supposed to drop in line with the elimination of tariffs, and Africans should find it easier to travel and work across Africa.

The AfCFTA is a comprehensive agreement and has the backing of the majority of the leaders in Africa. While anyone can monitor what is on the agreement and reported statistics, the agreement doesn’t guarantee that what is proposed will really take place, it just means that someone says it should happen.

The assumption that macroeconomic data or trade statistics can provide a true reflection of what is happening on the ground is not substantiated by empirical data in Africa. In his book,“Poor numbers: How we are misled by African development Statistics and what to do about it”,Morten Jerven shows how the statistical capacities of sub-Saharan African economies have fallen into disarray and its consequences in terms of development policy not delivering the benefits expected.

Historically, Africa is known to have scarce, bad and often unreliable data. KASI was started with the realization that Africa needs local and reliable sources of data especially bottom-up data (i.e. consumer confidence index, consumer price index) to supplement top down and publicly available data (i.e. GDP). Our mission is to provide innovative methodologies to measure underlying economic realities that rely on consumers (people and businesses) data.Since 2015, we have designed and launched three consumer indices including a consumer confidence index, a health & wellness index and a community-based lending index. Our methodologies and approaches are rooted in on-the-ground data that we source locally from people, vet & analyze using proven methodologies and report using the latest data exploration tools.

For example, our consumer confidence index tracks consumer views on the economic performance of 7 countries using a 15 questions survey deployed every month. This series has proven to be a reliable tracker of underlying economic realities in Africa. In Ivory Coast, Kenya,Ghana and South Africa, our readings have proven to track events and correlate with other publicly available data such as GDP readings.

As a premier provider of on-the-ground data in Africa,we have leveraged our capabilities to uncover insights to evaluate and support the implementation of the AfCFTA.

Our research findings indicate that to evaluate the progress of the free trade agreement implementation, stakeholders and actors should:

1) Go beyond the agreement and publicly available stats

• African stats are not reliable when it comes to telling on the ground story.

• Historically, African states have failed to implement what were "the best policies on paper".

2) Leverage bottom-up data to evaluate and manage progress

• Africans and African businesses are the main protagonists of the open market and will fuel the free trade area. It is critical to evaluate their awareness and their experience as they navigate the new environment.

• Markets are best predictors of economic growth. Data such as consumer/business confidence as well as prices and trading volumes provide more insights.

3) Unlock insights to understand intra and intercontinental market dynamics

• Measuring what is on paper and what is supposed to happen won't provide much insight. It is what is behind the curtain that will provide much needed insight.

• Uncovering emerging and hidden dynamics as the trade agreement gets implemented should be the focus.

Ultimately the success of the AfCFTA will depend on Africans first and what they make out of it.To find out what ordinary Africans have to say about the AfCFTA agreement and its impact, KASI conducted a survey back in February 2019 and asked ordinary Africans from Nigeria,Cameroon, Ghana, Kenya, Tanzania, Ivory Coast and South Africa how they would benefit from this agreement.

Download your free copy of the executive summary of KASI Insight's AfCFTA survey results here

Click on the image above to download free copy

References

1 How we are misled by African Development Statistics and What To Do about it, Morten Jerven, 2013 2 Whitepaper: Improve investment decision in Africa with consumer confidence data (Ivory Coast), Yannick Lefang, Jan Schalkwikk, Trudi Makhaya

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