Africa needs to take aggressive measures to protect businesses from losing billions of dollars’ in revenue due to illicit trade of counterfeited goods as it eases trade restrictions among 54 African nations.
“We have to take affirmative action, counter measures, to make sure that we prevent and mitigate this risk,” Wamkele Mene, secretary general of the African Continental Free Trade Agreement (AfCFTA), said on Thursday.
A continent-wide free trade agreement is currently being implemented with a view to reviving Africa's economy and its appeal among global investors. However, the risk of illicit trade of counterfeited goods, including pharmaceutical products amid a global pandemic, may dampen the flow of foreign funds, Mr Mene said at the fourth edition of the Future Investment Initiative in Riyadh.
The implementation of AfCFTA, due on July 1, has been delayed due to the pandemic, as African nations that lack the financial muscle to rollout economic stimulus packages to support their economies are struggling to control the spread of the virus.
AfCFTA, the biggest free trade agreement in the world, aims to bring about 1.3 billion people into a single market.
However, its success could be marred by the proliferation of illicit trade. Currently, about 50 per cent of pharmaceutical products sold across the continent are either counterfeit or are substandard, Mr Mene said, citing World Health Organisation data.
“We know that … [with] liberalising trade on the African continent, there will be a heightened risk of counterfeit goods’ illicit trade that will proliferate and transit through borders,” he said.
On Thursday, a preliminary agreement was signed between AfCFTA members, the FII Institute and Swiss technology company OriginAll, an anti-counterfeiting platform that helps determine the origins of goods.
The partnership will allow African nations to leverage technology and deploy digital platforms, enabling the continent to be “the model of how you can put up a fight against and defeat counterfeiting”, Mr Mene said.
Hans Schwab, chief executive of OriginAll, said counterfeiting is among the most overlooked economic problems and costs the world about $4.2 trillion a year.
“That’s in between [the] gross domestic products of Japan and Germany, the third and fourth largest economies in the world,” he said.
The FII institute also signed a preliminary agreement with Saudi Arabia’s Tadawul stock exchange, the Arab world’s biggest bourse, to cooperate on creating awareness on environmental, social and governance standards, publishing joint research and hosting events with key stakeholders to advance the ESG agenda in the kingdom.
Khalid Abdullah Al Hussan, chief executive of Tadawul, said that in the absence of unified global ESG standards, the bourse is helping Saudi corporates to understand how do “they meet the ESG requirements to be reported within their evaluations”.
“What we are trying to do here is educating Saudi corporates about several standards that are available … we are not here to create our own Saudi standards,” Mr Al Hussan told a separate FII panel discussion.
Boon Chye Loh, chief executive of the Singapore Exchange, said the lack of international ESG rules is a major hurdle.
“In an ideal world we should have international acceptance … so everybody can speak the same language, but [if] we look at accounting standards, it took decades for the world … and I hope the world doesn’t have to wait that long”, he said.
