Members’ Continued Commitment Crucial for the AfCFTA’s Success

It would not be an overstatement to say that 2018 was a momentous year in the history of regional integration in Africa, since it was then that the African Union Member States established the African Continental Free Trade Area (AfCFTA). Aside from its continental ambit, departing from the focus on integration through regional economic communities (RECs) in Africa, the timing of the formation of the AfCFTA is interesting and commendable. It was formed at a time when many were talking about the return of “deglobalization” (referring to less integration among economies) and the rise of populism and protectionism, challenging the post-Cold War era of free trade areas, even in countries that were traditionally the ardent advocates of globalization.

African leaders should also be applauded for forming the AfCFTA in the first decade of Agenda 2063, ticking the box on fast-tracking the formation of a continental free trade area. But, it should not be lost sight that strengthening regional integration as an African agenda goes as far back as 1963, when the OAU (the AU’s predecessor) was formed with the relentless efforts of such founding fathers as Emperor Haile Selassie I and Kwame Nkrumah. It has since been at the heart of African countries’ many efforts to integrate their economies, notably through the 1991 Abuja Treaty Establishing the African Economic Community.

The AfCFTA is intended mainly to create a single market in Africa, where goods, services and capital can easily cross borders, facilitated by the free movement of people. It aims to do so by substantially liberalizing tariffs (charges paid when importing or exporting) and non-tariff barriers (quotas, discriminatory treatment etc.) to trade and facilitating intra-African investment, making it easy for African businesses to trade and invest in the continent.

Regional integration is not a mere abstract concept promoted for its own sake, rather an agenda with multidimensional and potentially enormous practical impact on African economies. It is for this reason that the AfCFTA Agreement contains some grand objectives to be achieved through the continental integration that it is planned to facilitate. These mainly include supporting its State Parties’ industrialization, economic diversification and competitiveness, promoting regional value chain and agricultural development and ultimately helping achieve inclusive and sustainable development in the continent.

According to estimations made on the AfCFTA’s impact on African economies, there are many benefits expected from it. For instance, a 2018 UNECA estimation found that the AfCFTA can increase “intra-African trade by between 15Pct (USD50 billion) and 25Pct (USD70 billion), depending on liberalization efforts, in 2040, compared to a situation with no AfCFTA in place”. In the same period and conditions, the share of intra-African trade in industrial goods would grow “between about 25Pct (USD36 billion) and 30Pct (USD44 billion)”. The benefits of the AfCFTA would even grow and diversify as non-tariff barriers are practically removed and digital trade and investment are facilitated under the AfCFTA. The AfCFTA can, therefore, help increase the share of Africa in world trade and reduce African economies’ high dependence on exporting commodities. It would also reduce the associated macroeconomic vulnerabilities.

Yet, as preparing a business plan is different from actually doing the business, assenting to form the AfCFTA, albeit essential, is not sufficient to achieve the various developmental objectives of the free trade bloc. The rules agreed as part of the AfCFTA have to be translated into practice for the venerable objectives to materialize.

This demands State Parties’ continued commitment towards the AfCFTA at regional and national levels. Regionally, they need to expeditiously finalize the outstanding negotiations on tariffs, services concessions and rules of origin, which are particularly indispensable to fully operationalize the Phase I Protocols on Trade in Goods and Services. The Phase II Protocols on Investment, Intellectual Property Rights and Competition Policy, which are in their final stages, also need to be adopted swiftly. These need to be followed by the Protocols on E-Commerce and Women and Youth in Trade. It is only then that we can see the complete picture of the AfCFTA and embark on its comprehensive implementation.

At national level, each State Party also needs to do its own homework to evaluate its gains and losses from the AfCFTA so as to maximize the former and minimize the latter and accordingly adopt national supporting policies, regulations and institutional framework. This is because the expected gains and losses would not be uniform for all State Parties, perhaps one of the reasons for State Parties’ varying levels of engagement on the AfCFTA, including in the Guided Trade Initiative. An important component of domestic measures is developing an implementation strategy, which contains a State Party’s objectives, priorities and areas of focus in the course of implementing the AfCFTA, based on engagements with all stakeholders. Commendably, some countries, such as Kenya, have already launched their implementation strategies.

The number of State Parties has to also increase from its current 46 to cover all 55 AU Member States for the AfCFTA to be a truly continental bloc. Otherwise, its impact would not be significantly different from the existing large RECs, effectively adding another layer of REC (but with the title “Continental”) and further complicating the web of RECs in the continent. In this regard, it is laudable that the AU Assembly has been calling for non-State Parties to join the bloc, a call that has to last until full membership is secured.

There are also other challenges that the AfCFTA faces. A 2019 UNECA study succinctly summarized the main challenges as “limited energy and infrastructure development, insecurity and conflicts, multiple and overlapping membership of RECs, poor sequencing of the regional integration arrangements and limited financial resources”. Interestingly, the AfCFTA itself can help address some of these challenges, such as by facilitating increased investment on infrastructure such as energy, roads & telecommunications in the continent through its upcoming Protocol on Investment and helping reduce the likelihood of cross-border conflicts by increasing its State Parties’ economic interdependence. But, the continued commitment of State Parties is important to surmount these and other challenges facing the AfCFTA.

African leaders have showed their commitment towards regional integration by establishing the AfCFTA, but they need to continue their commitment towards achieving the continental agenda. It is important to note that even baby steps of State Parties are important for finalizing the outstanding negotiations and fully implementing the AfCFTA. After all, regional integration is a long-term process, not a one-time achievement.

11th Year • March 2023 • No. 115