Jack Hughes is senior vice-president at Hill+Knowlton Strategies (Canada). The views expressed represent the personal opinions of the author.
The African Continental Free Trade Agreement (AfCFTA) is a step towards an integrated regional market of 52 countries with more than 1.2 billion people. To put that in context, Canada currently has free-trade agreements with 51 countries across North America, Europe and the Asia-Pacific, which, together, have a combined population of 1.5 billion people.
If Canada can secure preferential access to this emerging African trade bloc, it would effectively double the number of countries and the number of people with whom Canadians could trade freely. Given its scope, along with a projected annual gross domestic product (GDP) of more than $3.4-trillion, the African common market promises to become a mammoth trade and investment opportunity.
The challenge for Canada is that many of our Group of 20 competitors are more actively engaged in Africa – including Britain, China, Germany, Russia, Saudi Arabia and the United States. Canada continues to have solid relationships with most African countries, both on a one-on-one basis as well as through the Commonwealth and la Francophonie, but we’ve fallen behind.
If Canada has any ambition to secure an “early-mover” advantage within the AfCFTA integrated market, we must adopt a “breadth and depth” strategy to make up that lost ground. Canada’s private sector and public service must work together to seize opportunities that strengthen economic ties with AfCFTA countries individually with the goal of engaging them collectively.
To that end, while Canada has no free-trade agreements in Africa, it does have investment treaties with Benin, Burkina Faso, Cameroon, Ivory Coast, Egypt, Guinea, Mali, Senegal and Tanzania. An agreement with Nigeria is signed, and talks are either done or continuing with the Democratic Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Mozambique and Zambia.
These foreign investment promotion and protection agreements have an immediate positive impact on commercial activity, and Global Affairs Canada has demonstrated its proficiency in negotiating them in a matter of months, weeks or days – not years. The department should be given an explicit mandate and expanded manpower to conclude as many of these treaties as possible.
If Canada had investment agreements with a majority of AfCFTA member-countries, not only would it increase bilateral commerce, it would improve the chances of securing access to the entire African market. This “breadth” strategy must be an “all of government” effort led by Global Affairs Canada and supported by any government entity with an African focus or footprint.
Of course, not every country will be interested in signing investment treaties with us. Chief among them, and the most significant, being South Africa. Back in 2012, South Africa moved away from foreign investment treaties in favour of domestic laws that offered somewhat-similar protections without the sometimes-controversial investor-state dispute-resolution mechanisms.
With Nigeria yet to sign onto the AfCFTA, South Africa will be the largest economic power in the common market – representing as much as 18 per cent of the combined GDP. Canada therefore needs to find other ways to “deepen” its bilateral partnership with South Africa, a key strategic ally with the potential to serve as an invaluable gateway to the African continent as a whole.
Newly re-elected South African President Cyril Ramaphosa has made it a priority to attract foreign private sector investment. To do so, he has pledged to address the corruption that plagued his predecessor Jacob Zuma’s administration. Canada’s response should be to send a series of trade delegations to South Africa, with one timed to coincide with the country’s next national investment conference.
In addition, Canada should invite Mr. Ramaphosa for an official state visit to address a joint sitting of Parliament in June, 2020 – the 30th anniversary of Nelson Mandela’s historic visit to Canada four months after his release from prison. Notably, Mr. Ramaphosa will by then have taken up the influential position of chairperson of the African Union.
If Canada adopts a breadth and depth strategy – broadening our network of bilateral investment treaties in Africa while deepening our economic ties to South Africa – we could become better positioned relative to most of our G20 competitors. If we fail to take action, we risk being left out of what has the potential to be the most dynamic trade bloc of the 21st century.