Project Sees Signing of MoU between ARSO and the AfCFTA
Nairobi, Kenya – (7th November 2022) – African Export-Import Bank (Afreximbank), the International Islamic Trade Finance Corporation (ITFC), the Arab Bank for Economic Development in Africa (BADEA), and the African Organization for Harmonization (ARSO), have partnered on a project to advance the harmonisation of standards governing Pharmaceuticals and Medical Devices. The project, deployed under the umbrella of the Arab-Africa Trade Bridges (AATB) programme, is designed to promote the quality, safety, and trade of Pharmaceutical and Medicinal products and Medical devices and Equipment imported or produced on the continent. This forms part of a broader regulatory framework harmonization programs across the continent, linked to the implementation of the AfCFTA and preparedness for such pandemics like COVID-19 in future.
Indeed, the World Trade Organization (WTO) and Organization for Economic Cooperation and Development (OECD have identified the COVID-19 pandemic as the largest threat to the global economy since the financial emergency of 2008–2009, as COVID-19 had severely demobilized the global economy. For Africa, on a positive note, due to the endemic reliance on imports, and the breakdowns in supply chains associated with lockdown measures, COVID‑19 has strengthened the case for developing intra-African regional value chains and unlocking the continent’s business potential, with a positive shift from global to a more regional and local supply chain in the key sectors including Agro-processing and the pharmaceuticals to foster manufacturing, trade, industrialization, and sustainable development,
With about 95.9% of Africa’s imports of medicinal and pharmaceutical products, originating from outside the continent (Karisha Banga, et al. 2020) COVID-19 pandemic, has not only magnified Africa’s reliance on imported pharmaceuticals (both final and intermediate products) but has also amplified the urgency for partnerships to build competitive, resilient and robust value chains and manufacturing opportunities in this sector, while addressing the regulatory and policy challenges to facilitate a regional approach to developing medical value chains based on comparative advantages and economies of scale, while focusing on the transformation of Africa into a location of competitive industrial production and the prioritisation of sectors with high potentials for industrial growth, and meaningfully making Africa leapfrog in its industrial development.
The ongoing partnership between AFREXIMBANK, ITFC, BADEA, and ARSO, has the objective to Harmonise standards for Pharmaceuticals and Medical Devices in Africa, linking to the implementation of the AfCFTA Agreement in coordination with the AfCFTA Secretariat, given that the anticipated standards to be harmonised by ARSO being comparable to the 4,547 HS6, Tarif lines for the AfCFTA, as the WTO encourages Harmonization, use of equivalence and mutual recognition in the Free Trade Agreements, such as the AfCFTA.
This project, designed to be implemented in a phased manner over three years, till 2023, begun with the harmonisation of standards for Medical devices and equipment, Pharmaceutical and medicinal products, and African traditional medicine under the auspices of ARSO Technical Committees, ARSO/TC 78, ARSO/TC 80 and ARSO/TC 82, respectively, whereby the 1st phase focused mainly on the analysis of the existing international, regional, and national standards for their suitability in meeting the unique challenges faced by African healthcare industries. The 2nd phase is focusing on the long-term development and harmonization of African Unique Standards, which are non-existing standards developed from the level zero draft. The project is also addressing the issue of technical regulations under the ARSO Conformity Assessment Committee (ARSO CACO) under its Working Group five, ARSO CACO WG5/ Technical regulation Subcommittee.
The Project which was launched in September 2020, aims to enhance intra-African trade and investment, reduce substandard counterfeit products, and build resilient regional health systems, in the Pharmaceuticals and Medical Devices, with the following milestones:
- The harmonisation of One-hundred and Thirteen (113) standards and Thirteen (13) Technical Regulation Guidelines that have already been published, and distributed both to the Partners, ARSO Members, and relevant Stakeholders in the Pharmaceutical industry;
- The ongoing consideration of an additional Two Hundred and Sixty (260 standards and Seven (7) Technical Regulation Guidelines, under the process of harmonisation, and with the analysis of work in progress reflected below:
- Medical devices and Equipment – ARSO TC 78
- Seventy Final Draft African Standards (70 FDARS) – and being international standards to be presented to the ARSO Council for adoption approval by the end of 2022
- Thirty (30) Unique standards under discussion at different stages in the Committee
- ARSO TC 80/ Pharmaceutical and Medicinal products
- Fifty-One Final Draft African Standards (51 FDARS) – international standards to be presented to the ARSO Council for adoption approval by the end of 2022
- Forty-Eight (48) Unique standards under discussion at different stages in the Committee
- ARSO TC 82/ African Traditional medicines
- Twenty (20) – Unique standards under National Consultation by Member States
- Forty-Two (42) – Unique standards under discussion at different stages in the Committee
- ARSO CACO WG5/ Technical regulation Subcommittee
- Seven (7) guidelines are currently at the inquiry stage by Member States
From the foregoing, taking into consideration that Standards underpin Industrialisation, Trade, and Market Access, and that the Pharmaceuticals Industry is one of the levers for building the Africa We Want, key stakeholders commented as follows:
H.E. Wamkele Mene, the AfCFTA Secretary General explained: “The AfCFTA Value Proposition for the Health Sector. The African Continental Free Trade Area (AfCFTA) Agreement has established one of the largest free markets across 55 African countries. It is meant to increase intra-Africa trade among State Parties. This however must be supported by an enhanced industrialization effort to meet the supply side constraints.
The pharmaceutical industry constituting $17billion of imported pharmaceutical preparations and products is one of the sectors which will release major gains from the market access provided by the Agreement for increased trade among African countries if well supported. We know and understand
that Africa continues to import a majority of its medicines and vaccines from outside the continent. The COVID19 pandemic however presents a potential for the continent to tap into the production of medicines and vaccines to contribute to addressing health gaps in the continent and increasing GDP growth.
The Secretariat has developed the Private Sector Engagement Strategy 2022-2032, and in this strategy, we have identified pharmaceuticals as part of four initial priority value chains, the others being agro-processing, automotive, and transportation and logistics. The strategy indicates that one of the main barriers to increasing production and intra-African trade is the lack of harmonized standards and regulations across the continent. This is in addition to a lack of markets, a lack of competitiveness compared to other regions, and insufficient transport and logistics. Addressing the bottlenecks around the pharmaceutical sector requires an urgent focus on strengthening Pan African regulatory bodies to harmonize regulations of pharmaceutical standards, increasing procurement of locally produced drugs, upgrading the capacity and scale of local manufacturers, and increasing access to affordable intra-continental freight capacity.
Focus on Standards Development in the Implementation of the AfCFTA Agreement
In our quest to implement the AfCFTA Agreement, related to Technical Barriers to Trade, it is known that standards and regulations are among the most important types of trade‐related measures used around the world to regulate trade. Due diligence must therefore be given to how they are crafted to help governments achieve important policy objectives, including safeguarding human health and safety, as well as protecting the environment and without unnecessarily disrupting trade. State Parties have therefore prioritized harmonization of standards in priority sectors as a high-impact deliverable for the implementation of the AfCFTA. To this end, the AfCFTA Secretariat has signed a Memorandum of Understanding (MoU) with ARSO to provide a framework of cooperation to strengthen intra-Africa trade by prioritizing the development and harmonization of standards for enhanced diversification, industrialization, and transformation of Africa’s economy and to boost the continent’s capacity to meet its internal demand from its own resources.
Implementation of the Memorandum of Understanding with ARSO
The MoU and its implementation plan, therefore, provide a basis and resources for the execution of the deliverable on harmonization of standards in priority areas as envisaged by the AfCFTA Policy Organs. It is our interest to therefore partner with relevant technical institutions such as ARSO to deliver on our mandates while leveraging on the technical expertise on the development and harmonization of standards already existing in the continent. The activities specified in the ARSO and AfCFTA Secretariat MoU Implementation Plan (2022-2025) will directly contribute to the overall objectives of the AfCFTA, specifically on speeding up Africa’s economic integration, increasing intra-Africa trade, and addressing the key challenges related to COVID-19 pandemic and other health challenges facing the continent.”
H.E. Ambassador Albert M. Muchanga, the Commissioner for Economic development, Trade, Tourism Industry and Minerals of the African Union Noted, “Africa is home to some of the most diverse plant and floral varieties known to man and these potentially form the base of many pharmaceutical products. The pharmaceutical and medical devices industries are, however, not that well developed in Africa. Aside from its potential to become a strong driver for economic growth, events of the last few years have shown that the continent needs to establish its own self-reliance when it comes to medical requirements across the board. Africa now has enough pharmaceutical and medical device standards developed or under development to enable this industry to expand in those countries where it has been established and to be seeded in many other African countries. In this sector, perhaps more than in any other, the door to potential counterfeit and sub-standard products must remain firmly shut due to the negative consequences of such on health and safety. We at the AUC, therefore, encourage and support the ongoing development and harmonisation of standards for Pharmaceuticals and Medical Devices in Africa being carried out under the Umbrella of the Arab Africa Trade Bridges (AATB) Program.”
Ms. Kanayo Awani, the Executive Vice President, Intra-African Trade Bank, Afreximbank, while reflecting on the initiative’s progress, said “As Africa undertakes the ambitious implementation of the AfCFTA, it is vital that our regulatory and policy framework reflects an interconnected region in which growth can be cross-border and truly intra-African. The recent pandemic proved the vulnerability of Africa’s dependence on foreign medical imports, and this partnership is advancing a new model of manufacturing and production which secures the continent and its people against future crises and challenges.”
Eng. Hani Salem Sonbol, ITFC CEO, commenting on the initiative, said, “The COVID-19 pandemic demonstrated the urgent need to develop intra-African regional value chains and unlock the continent’s business potential to foster more trade as a counterbalance to the region’s high exposure to global supply chain challenges. As the pandemic’s impact on the global economy begins to fade, now is the time to strengthen our resiliency as we look to achieve more sustainable economic development. The AATB Harmonization Project, which aims to enhance the continent’s health resilience, will continue to build competitive and robust value chains and manufacturing opportunities in the pharmaceutical sector. A thriving homegrown pharmaceutical sector will increase trade and investment, which will deliver more jobs, greater economic opportunities, and enhance Africa’s overall economic prospects.”
His Excellency Dr Sidi Ould Tah BADEA Director General, “As the pandemic stretched the abilities of the medical and health supply chain and demonstrated the health dangers from extreme import dependence. The same pandemic created an opportunity to reflect and reassess how we can stimulate and standardize the medical manufacturing and medical trade in Africa. This joint project is critical commitment from BADEA and our partners to the project to provide the tools, coordination platform and the necessary funds to build capacity and create resilience to future health shocks through manufacturing and harmonizing the medical industry necessary medical supplies in the continent”
Dr. Hermogene Nsengimana, ARSO’s Secretary General, while referring to the partnership said that, “All the work items were identified and proposed by the ARSO Member States, as a priority to respond to the Covid–19 pandemic and partnering to bring a solution for Africa with the vision of prioritising the implementation of the AfCFTA Agreement, a step that was sealed during the Intra-Africa Trade Fair 2021 that took place in Durban, South Africa in November, where ARSO and the AfCFTA Secretariat signed an MoU aimed at the implementation of the TBT Annex 6 and SPS Annex 7, as the Agreement binds all state parties to work collaboratively to reduce the challenges of the TBTs in Africa.”
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About African Continental Free Trade Area (AfCFTA)
The African Continental Free Trade Area (AfCFTA), created by the African Continental Free Trade Agreement among 54 of the 55 African Union member States, is a free trade area founded in 2018 and is one of the fourteen (14) flagship projects of the African Union Agenda 2063, the Africa we Want. The Agreement entered into force on 30 May 2019 for the 24 countries that had deposited their instruments of ratification by this date, with the operational phase, launched during the 12th Extraordinary Session of the Assembly of the Union on the AfCFTA in Niamey, Niger on 7 July 2019. Considered the largest free-trade area in the world in terms of the number of participating countries since the formation of the World Trade Organization the start of real trading under the AfCFTA Agreement began on 1 January 2021, however, no trade has as yet taken place under the AfCFTA regime.
Implementation of the AfCFTA Agreement is on course and as of April 2022, 43 of the 54 signatories (80%) have deposited their instruments of AfCFTA ratification. The AfCFTA Secretariat, which implements the Agreement, is hosted in Accra, Ghana by the Government of the Republic of Ghana.
About African Union Commission (AUC)
The African Union Commission (AUC) is the African Union (AU)’s secretariat and undertakes the day-to-day activities of the Union. It is based in Addis Ababa, Ethiopia. The Commission is composed of a Chairperson, Deputy Chairperson, and six commissioners, plus staff. The Assembly elects the AUC Chairperson and AUC Deputy Chairperson. The Executive Council elects the six AUC Commissioners, who are then appointed by the Assembly. Commission members’ terms are for four years, renewable once. Elections and terms are governed by the AU Assembly Rules of Procedure, the Executive Council Rules of Procedure , and the Commission Statutes. Its functions include:
- Representing the AU and defending its interests under the guidance of and as mandated by the Assembly and the Executive Council
- Initiating proposals to be submitted to the AU’s organs as well as implementing decisions taken by them and Acting as the custodian of the AU Constitutive Act and all other OAU/AU legal instruments
- Liaising closely with the AU organs to guide, support, and monitor the AU’s performance to ensure conformity and harmony with agreed policies, strategies, programmes, and projects
- Providing operational support for all AU organs and assisting Member States in implementing the AU’s programmes
- Drafting AU common positions and coordinating Member States’ actions in international negotiations
- Managing the AU budget and resources and elaborating, promoting, coordinating, and harmonising the AU’s programmes and policies with those of the Regional Economic Communities (RECs)
- Ensuring gender mainstreaming in all AU programmes and activities and Taking action, as delegated by the Assembly and Executive Council.
For more information visit: www.au.int
About African Export-Import Bank (Afreximbank)
Afreximbank is a Pan-African multilateral financial institution mandated to finance and promote intra-and extra-African trade. Afreximbank deploys innovative structures to deliver financing solutions that support the transformation of the structure of Africa’s trade, accelerating industrialization and intra-regional trade, thereby boosting economic expansion in Africa. A stalwart supporter of the African Continental Free Trade Agreement (AfCFTA), Afreximbank has launched a Pan-African Payment and Settlement System (PAPSS) that was adopted by the African Union (AU) as the payment and settlement platform to underpin the implementation of the AfCFTA. Afreximbank is working with the AU and the AfCFTA Secretariat to develop an Adjustment Facility to support countries in effectively participating in the AfCFTA. At the end of 2021, the Bank’s total assets and guarantees stood at US$24.8 billion, and its shareholder funds amounted to US$4 billion. Afreximbank disbursed more than US$51 billion between 2016 and 2021. The Bank has ratings assigned by GCR (international scale) (A-), Moody’s (Baa1), Japan Credit Rating Agency (JCR) (A-), and Fitch (BBB-). The Bank is headquartered in Cairo, Egypt.
For more information, visit: www.afreximbank.com
About the International Trade Finance Corporation (ITFC)
The International Islamic Trade Finance Corporation (ITFC) is a member of the Islamic Development Bank (IsDB) Group. It was established with the primary objective of advancing trade among OIC member countries, which contributes to the overarching goal of improving the socioeconomic conditions of the people across the world. Commencing operations in January 2008, ITFC has provided more than US$61 billion of financing to OIC member countries, making it the leading provider of trade solutions for these member countries’ needs. With a mission to become a catalyst for trade development for OIC member countries and beyond, the Corporation helps entities in member countries gain better access to trade finance and provides them with the necessary trade-related capacity-building tools, which would enable them to successfully compete in the global market.
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About the Arab Bank for Economic Development in Africa (BADEA):
Founded in 1974 by eighteen Arab countries, the Arab Bank for Economic Development in Africa (BADEA) is BADEA is rated Aa2/Positive outlook by Moody’s, and AA/Stable outlook by S&P Global Ratings. BADEA is a multilateral development financial institution recognized as a reputable partner in Arab–Africa cooperation. BADEA offers a wide array of products and services for financing development in Africa. BADEA products include loans to public and private entities that finance trade, infrastructure, agriculture, rural development, and social sectors, small and medium enterprises with special focus on women and youth, as well as grants for capacity development. BADEA 2030 strategy positions the bank as a flexible, effective, and reliable development partner in Africa’s transformation and progress towards 2030 Sustainable Development Goals (SDGs), for the African Union’s Agenda 2063
For More Information visit: www.badea.org
About the African Organisation for Standardisation (ARSO)
The African Organisation for Standardisation (ARSO) is Africa’s intergovernmental standards body formed by OAU (currently AU) and UNECA in 1977 in Accra Ghana. The ARSO mandate is to facilitate intra-African and World Trade through Harmonisation of Standards and Conformity Assessment Procedures and facilitation of opportunities for Mutual recognition arrangements for the harmonised standards and conformity assessment which directly aims at reducing Technical Barriers to Trade in Africa.
On the African level, harmonisation of African standards has been championed through ARSO and more than 1485 standards have been harmonised[1]. The harmonised work is done within 15 sectors comprised of 84 Technical committees (TC) covering various areas of major African interest.
These 15 Sectors are: Basic and General Standards; Agriculture and Food Products; Building and Civil Engineering; Mechanical Engineering and Metallurgy; Chemical & Chemical Engineering; Electro-technology; Textiles and Leather; Transport and Communication; Environmental Management Systems; Energy and Natural Resources; Management and Quality; Services; African Traditional and Complimentary Medicine; Healthcare Technology; Household Goods and Services.
For More Information visit: – www.arso-oran.org
[1] Harmonised as at October 2022