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‘Ensuring the sustainability of their industrialization is,
therefore, not just a matter of choice but of necessity for African
countries.’
By Dr. Henok Asmelash
Three decades have passed since the UN General Assembly proclaimed 20 November ‘Africa Industrialization Day’, but Africa’s quest for industrialization remains elusive. The limited progress in industrial development has kept the participation of African countries in
international trade to the importation of manufacturing goods and exportation of primary products. The relatively high share of manufacturing goods in intra-African trade, however, suggests that enhanced intraregional trade holds key to unlocking the industrial potential of the continent. African countries have recently taken a major step in this direction by establishing the African Continental Free Trade Area (AfCFTA). This short contribution considers whether and
how the AfCFTA promotes sustainable industrialization.
The challenge facing African countries is not just to industrialize but to industrialize in an inclusive and sustainable manner. Past
industrializations were fuelled by cheap fossil fuels with virtually no
legal constraints on the use of industrial policy instruments. We now know that fossil fuels account for the majority of global greenhouse gas emissions. African countries hardly contributed to the greenhouse gas emissions that brought the world to the edge of irreversible climate change – but they are one of the most vulnerable countries to climate change. The traditional path to industrialization will expose the continent to further environmental risk and degradation. Ensuring the
sustainability of their industrialization is, therefore, not just a matter of choice but of necessity for African countries.
Powering African industrialisation
Sustainable industrial development entails the use of cleaner
technologies and production techniques to reduce industrial emissions
and waste. Since energy is the main source of industrial emissions,
improving industrial energy efficiency and the use of renewable energy
sources are central to industrial sustainability. The use of renewable
energy technologies is currently limited in most African countries
despite the abundance of solar, wind, geothermal and hydropower
resources. The AfCFTA – the operationalization of which has been
derailed by the global pandemic – offers a great opportunity to overcome
some of the barriers to the development and deployment of such
technologies across the continent.
The AfCFTA negotiations are taking place in two phases covering trade in
goods and services, dispute settlement, investment, intellectual
property and competition policy. The first phase negotiations on trade
in goods and services are yet to be finalized. The agreed modalities for
tariff negotiations enjoins the AfCFTA parties to liberalize 90 percent
of their total tariff lines and reserve the remaining 10 percent for
sensitive and excluded products. The AfCFTA parties are yet to submit
their sensitive and exclusion lists and what goes into these lists will
determine the extent to which the AfCFTA promotes intraregional trade in
sustainable energy technologies. There is currently nothing in the
AfCFTA Agreement or the protocol on trade in goods that requires the
parties not to place energy efficiency and renewable energy products in
their exclusion or sensitive lists. It is therefore imperative that the
AfCFTA parties prioritize such products for early liberalization on
their own.
The first phase negotiations are also set to open up the African market
for trade in services. The AfCFTA parties have identified five services
sectors (i.e. transport, communication, tourism, financial and business
services) for early liberalization. Most of these priority services
sectors are relevant to sustainable industrial development. The
liberalization of business services, for example, will cover renewable
energy services such as solar panel installation, repair and
maintenance. Market access commitments in these services sectors will
enable African renewable energy companies to provide services across the
continent and thereby promote the widespread deployment of renewable
energy technologies.
The second phase negotiations will further expand the scope of the
AfCFTA beyond trade in goods and services to cover investment,
intellectual property rights and competition policy. African countries
should use this opportunity to incorporate sustainability into their
regional investment, competition and intellectual property regimes to
promote much-needed investment and innovation (and adaptation) in
sustainable energy technologies.
Securing Industrial Policy Space
Besides creating a regional market for sustainable energy products and
services, the AfCFTA should also play a role in securing green
industrial policy space for African economies. Industrial policies such
as subsidies and infant industry protection were key to past
industrializations. However, the ‘kicking the ladder away’ approach
of industrial economies and the ascendancy of neoliberal views forced
these industrial policies out of fashion (and also out of law) over the
past few decades. Industrial policies are now back in fashion, but many
constraints against their adoption are ingrained into and reinforced by
international economic agreements of the last few decades. Most African
countries are parties to international agreements that tie their hands
against the adoption of industrial policy instruments. Multilateral
agreements such as the Agreement on Subsidies and Countervailing
Measures, for example, restrict the subsidization of renewable energy
sources. African countries should cooperate under the umbrella of the
AfCFTA to demand for more green policy space in international economic
agreements. One of the key promises of the AfCFTA is to enable African
countries ‘speak with one voice and act collectively’ to promote the
common interests and positions of African countries in the international
arena. If there is one area where such voice is of vital importance is
industrial policy space. While it lacks a common external trade policy,
nothing prevents the AfCFTA from serving as a forum for coordinating
African external trade policy at least in areas where there is an
apparent common interest such as industrial policy space.
Advancing Africa’s sustainable industrialisation
The AfCFTA offers African countries the opportunity to advance their
sustainable industrialization by creating a single and integrated
continental market. But seizing this opportunity requires removing
barriers to intraregional trade and investment in sustainable energy
technologies. It also requires a concerted effort to secure green
industrial policy space for developing a competitive African industry
that produces sustainable energy technologies such as solar panels and
cells, wind turbines and wind towers. Sustainability has not featured
explicitly in the AfCFTA negotiations so far, but much of the
negotiations on market access commitments are still ongoing and they are
vital to greening the AfCFTA.
• Dr. Henok Asmelash is a Lecturer at Birmingham Law School, The University of Birmingham.
