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Potential Health Impact of the African Continental Free Trade Area Agreement

By Abiodun Awosusi
on October 14, 2019

Nearly all African countries have endorsed the continental free trade agreement. Trading is scheduled to commence in 2020 after key negotiations are concluded. Implementation of the agreement is likely to impact health in at least five areas: human capital investments, health innovations, trade for social impact, health security and universal health coverage. Health and development stakeholders should take proactive measures to ensure health is protected in policies, programs and negotiations.

The African Continental Free Trade Area (AfCFTA) agreement entered into force on May 30 2019 following the ratification of the agreement at the African Union (AU) Summit in Kigali in March 2018. Building on the 1991 AU Abuja Treaty and several rounds of negotiations since 2015, the continental endorsement marks the historic beginning of one of the largest trading blocks in the world with 1.2 billion people and combined gross domestic product of over US$3 trillion. Although regional economic communities have made progress in trade integration, the continental market is still largely fragmented.  In alignment with the aspirations of the Sustainable Development Goals (SDGs) and the African Union Agenda 2063, the AfCFTA is intended to facilitate continental integration, boost intra-African trade and create jobs as trading is scheduled to commence in July 2020.

Harnessing the opportunities in trade and investments across Africa is key to inclusive economic development, domestic resource mobilization and poverty reduction. Intra-African trade is currently low (17% of total (African) exports) compared to Latin America (22%), North America (31%), Asia (59%) and Europe (69%). The United Nations Economic Commission for Africa projects that progressive implementation of AfCFTA will raise the volume of exports within Africa by nearly 50% between 2020 and 2040.

Although there is widespread endorsement of the agreement by African leaders and development partners, there is limited focus on the opportunities and challenges for health innovations and universal health coverage with successful AfCFTA implementation. Liberalization of goods and services is a key part of the agreement but there is inadequate emphasis on the health sector. Negotiating state parties selected five priority service sectors: business and financial services, communication, transport and tourism. These areas represent socio-economic determinants of health which have proven impact on health indices. Improved transport infrastructure can reduce geographical barriers to health services and better communication networks can enhance interactions across health systems. Use of traditional and digital financial services can potentially improve health financing systems for governments, payers, providers and citizens.

Despite the significance of these priority services, there is sparse information about how much emphasis is placed on potential impact and benefits of AfCFTA on population health. The implementation of the agreement is a long journey with several regional and continental negotiations ahead. Health and development stakeholders need to be fully aware of and find opportunities for productive engagement in the process as advocates for Health in All Policies focusing on (at least) five areas:

Human Capital Investments

While good health and education are more than worthwhile aims in their own right, successful implementation of the agreement and trade liberalization will require well-educated and healthy citizens. Evidence shows human capital investments contribute significantly to economic growth and poverty reduction. Investing in people through data-driven, evidence-based policies is a strong indication of the readiness of African leaders and development partners for productive continental integration that harnesses the benefits of trade for inclusive economic growth. More than half of Africa’s populace today is less than 25 years old: the continent’s health and education sectors are ripe for increased domestic financing, catalytic aid and impact investments, with promising returns on investment.

A healthy citizenry is likely to be productive across all sectors and contribute to sustained economic growth. A well-educated population can be adequately engaged on a variety of policy and business decisions as well as emerging benefits from AfCFTA implementation. Although human capital investment may not be tied to AfCFTA, this historic moment makes such national and regional investments crucial alongside infrastructure financing which ongoing negotiations have prioritized. It also aligns with the policy objectives of Agenda 2063, the SDGs and the World Bank’s Human Capital plan.

Health Innovations and Partnerships

Africa is the fastest growing market in the global mobile economy, with total subscriber base projected to reach 600 million by 2025. The continent is a global leader in mobile money adoption and usage. By 2030, one in five of the world’s consumers will be in Africa and household consumption will reach US$2.5 trillion. The United Nations Economic Commission for Africa estimates that business opportunities in the health and wellness sector in Africa will be worth US$259 billion by 2030. It is therefore time for data-driven innovations hinged on rigorous problem analysis, contextual insights and digital tools.

There are established and emerging multinational corporations, healthcare-focused small and medium-scale enterprises including technology startups with viable business models keen to seize opportunities to improve access to high quality health care in Africa. Notable incubators and accelerators such as the Amref Health Africa Accelerator, Co-Creation Hub, Google Launchpad Accelerator, Merck Accelerator, MEST, Ventures Platform and Wennovation are helping entrepreneurs develop and scale innovative solutions to health system challenges across the continent. This trend is likely to continue with wider collaborations and investments across countries during AfCFTA implementation and a real opportunity to create affordable products and services for Africans including the poor and vulnerable.

Trade for Social Impact

There is growing realization of the value of aid for trade and impact investments in Africa. The Overseas Private Investment Corporation (a precursor to the US International Development Finance Corporation) and UK’s Department for International Development are investing more funds in private enterprises with social impact. A consortium of development finance institutions (DFIs) of the United States, Canada, France and the United Kingdom recently launched the Invest2Impact Initiative for women-led businesses. The World Bank, African Development Bank, African Export-Import Bank and national DFIs are investing in development programs through trade and infrastructure financing with potential health impact.

Despite ongoing need for official development assistance for specific programs across several African countries, there is useful evidence from exemplary countries particularly the Asian tigers that Africa’s sustainable development hinges on a paradigm shift towards innovation, entrepreneurship and trade. Although context-specific, home-grown solutions will become increasingly relevant, AfCFTA represents a major opportunity for leaders across public, private and social sectors to prioritize Health in All trade policies and programs. The Africa Healthcare Federation and African Business Coalition for Health have crucial roles to play on this journey towards health for all Africans by leveraging private sector expertise and investments as well as public private partnerships to maximize the benefits of trade for improved health outcomes within pluralist health systems with strong public health sector.

 

Health Security

Current movement of people and goods across borders requires emphasis on health security. The 2014 – 2015 Ebola epidemic in West Africa shows the negative epidemiological, economic and fiscal consequences of a major epidemic across countries with weak health systems: the crisis resulted in the death of over 11, 000 people and cumulative loss of US$2.8 billion for the three most affected countries – Guinea, Liberia and Sierra Leone. The ongoing Ebola epidemic in the Democratic Republic of Congo affirms the value of investing in health system strengthening and cultural intelligence to prevent and/or effectively manage epidemics. While there are better tools and multi-stakeholder collaboration platforms to manage Ebola today, there is need to pay more attention to health security as AfCFTA implementation progress gains significant momentum.

Deeper regional integration and an expanded tourism market will result in more international migration and movement of goods. In 2018, the continent received more than 60 million tourists as one of the fastest growing tourism markets in the world. There is therefore an urgent need to invest more resources in pandemic preparedness particularly in regional institutions like the Africa Centers for Disease Control and Prevention with vital support from multilateral and bilateral development organizations including the World Health Organization and the United States Centers for Disease Control and Prevention. Each country also needs a strong public health institute to predict, prevent and manage spread of communicable diseases within and across borders, without neglecting the growing burden of non-communicable diseases.

Universal Health Coverage

Increased human capital investments and deployment of context-relevant health innovations can stimulate progress towards UHC in Africa. UHC is one of the SDG 3 targets, which offers countries the right framework to increase access to high-quality health services for every citizen without financial hardship. Sustained global support for UHC culminated in the recent adoption of a high-level United Nations declaration calling for more concerted efforts to accelerate progress across countries in order to achieve the target by 2030. While Ethiopia, Ghana, Kenya, Nigeria, Rwanda and South Africa have exemplary policies and programs to enhance access to high quality health services, all African countries generally need to move faster to make UHC a reality.

Implementation of AfCFTA is likely to have a major impact on health system strengthening and UHC with varying results across countries in Africa. Sustainable financing is central to UHC progress but significant funding gaps persist across the continent. There is a potential opportunity to harness innovative financing mechanisms for UHC but there is limited evidence on how the continental agreement will affect fiscal space for health. How will trade liberalization affect burden of disease, health system governance and domestic resource mobilization for health? What impact will the free movement of people across borders have on intra-Africa health workforce migration and regional research collaborations? What is the potential effect of regional integration on health information management systems within and across countries? There are no easy answers to these questions. Researchers have an urgent task to generate useful insights to guide policy makers and practitioners as full implementation of AfCFTA approaches.

In conclusion, global health and development stakeholders need to become more aware of the opportunities and challenges of AfCFTA implementation for health market expansion, universal health coverage and health security. While the five proposed areas are not exhaustive, they represent a basic foundation for rigorous research and informed engagement by health and development leaders in AfCFTA and trade-related processes. Other issues such as research and development, biopharmaceutical innovation and intellectual property rights also need to be considered. Although sceptics may view AfCFTA-related issues as a distraction from ongoing efforts to achieve UHC across African countries, it is important for health sector leaders to assess the potential impact of an ambitious continental initiative on health access and outcomes and proactively engage their trade, investment and finance counterparts at national and regional levels to ensure health is protected in policies, programs and agreements.

About Abiodun Awosusi

Dr. Abiodun Awosusi is a TEDMED Research Scholar and Health Economist at Health Systems and Development Enterprise. Previously, he was Technical Advisor at the African Platform for Universal Health Coverage and Health Financing Associate at Clinton Health Access Initiative.
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