The AfCFTA May Be the Last Opportunity for Africa’s Economic Transformation

Free Trade in Africa

By Mr. George Boateng and Ms. Beatrice Oforiwaa Dankyi

The landmark African Continental Free Trade Area (AfCFTA) agreement, which will be fully operational in 2020, has the potential to create a continental free-trade zone with a combined Gross Domestic Product (GDP) of USD$3.4 trillion, according to the African Union (AU). This trade agreement, if implemented fully, would become the largest in the world. The AfCFTA is one of the flagship projects of the First Ten-Year Implementation Plan(2014-2023) under the AU’s Agenda 2063—”The Africa We Want.” Realistically, what do Africans really want?

The AfCFTA emphasizes the reduction of tariffs and non-tariff barriers, and the facilitation of free movement of people and labor, right of residence, right of establishment, and investment. Yet the hype around the AfCFTA’s agenda could experience a boomerang effect if negotiations on some protocols and annexes become protracted. Despite its extensive propagation by the AU leadership, some experts have cautioned against the way ahead for the AfCFTA, yet expectations remain high. There are several challenges on the road ahead.

Member nations of the African Union vary in their preparedness to execute the requirements of the agreement and its related protocols and annexes. It is also a fact that in order for the AfCFTA to thrive, the continent needs to address the existing annual infrastructure deficit—about USD$108 billion according to the African Development Bank(2018)—to be able to drive free trade. Additionally, the continent would require billions of dollars to strengthen supply chains as well as fiscal and monetary policy in order to ensure that the benefits of the agreement are maximized. Primarily, there is the need to develop national strategies to guide the implementation of the AfCFTA. Accordingly, African countries must be willing to have open borders. Coincidentally, developments such as Nigeria’s August 2019 closing of its borders with Benin and Ghana may cripple the AfCFTA’s effectiveness, especially when all the involved countries are signatories to AfCFTA.

In the perspective of the great pan-Africanist, Dr. Kwame Nkrumah, “It is clear that we must find an African solution to Africa’s problems, and that this can only be found in African unity. Divided, we are weak; united, Africa could become one of the greatest forces for good in the world.” Likewise, Ethiopian Prime Minister Abiy Ahmed’s recent Nobel Peace Prize honor can also inspire Africans to pursue the Africa they desire. To this end, Africans need to rally around the AfCFTA to make it a success. This is all the more important given the suboptimal impact on Africa’s development that has been derived from multilateral trade agreements to date. The AfCFTA might be the last grasp chance for Africa’s economic transformation.

 

George Boateng is a Research Analyst at the African Center for Economic Transformation based in Accra, Ghana and Beatrice Oforiwaa Danky is a Ph.D. candidate at the University of Ghana.
This article is an extract from Wilson Centers’s Africa: Year in Review 2019.

21 Comments

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  2. Avatar saulos says:

    How will countries that does not produce things benefit from this free trade eg those with no mines?

    • John Osei John Osei says:

      Hello Saulos,

      There will be winners and losers in this agreement. For instance, over 50% of Africa’s cumulative GDP is contributed by Egypt, Nigeria and South Africa, while Africa’s six sovereign island nations collectively contribute just 1%. For a country that does not produce anything, it means it imports alot.

      One benefit for such countries is that AfCFTA will ease the process of importing raw materials from other African countries. It will also enable SMEs to set up assembly firms in their countries, in order to access cheaper means of production and thereby increase incomes, and also promote learning among the firms in that country to upgrade and then be able to export to other countries too.

      What is needed for these countries that are most at risks (not producing anything) in the short to medium term is policies aimed at preferential treatment. Also, industrial policies must also be put in place, especially those concerning SMEs and manufacturing.

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    • Avatar Parfait Bihkongnyuy says:

      Hi Saulos,
      Welfare improvement cannot only come in the form of selling. It could be the country’s ability to import now at cheaper prices because of no restrictions. Several others include having a broader market for some of its products (there is no country with zero production), free movement of its people within the region, access to newer technologies and many others. Definitely, every country can gain something but some will benefit more than others.

  3. Avatar Mohamed Ahmed ELAASY says:

    Not only is the freedom of the flow of goods between African countries what we need to achieve the goals of the African peoples in achieving sustainable development, butىalso also the freedom of movement of Factors of production of labor and capital .. We hope to achieve complete economic unity, as is the case in the European Union, and to reach a unified monetary currency. To face global challenges from the ambitions of countries and international companies that exploit the capabilities of the African continent and contribute to expanding the circle of poverty, terrorism, and economic, social and political backwardness.

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  4. Avatar Mandlenkosi Maphanga says:

    It is the hope of Africa to grow its economy free of colonizers

  5. Avatar Daniel Tchysseke says:

    africa must export to africa their raw material, and africans must transform africa´s row material. and sel finished products to africa. there must be regualtions to prohibit africans from importing products that africa cam produce in large scale for afica. exemple is textile products and clothing. this will force manufactures of named brands to start manufacturing in africa.

    • Avatar Simon Kirabo says:

      This is a great treaty and people in my nation are really excited about. When I looked at these nations, I realised Congo DRC seems to be at the center of the trade routes yet it seems impenetrable. What’s the plan of making DRC better for business?

    • Avatar Brian Motee says:

      Intra-African trade maybe the remedy to the ever increasing poverty levels in Africa.

    • John Osei John Osei says:

      Absolutely, intra-African trade is a major factor for poverty alleviation on the continent. On July 15, we will launch our flagship report (#ATR3) at this year’s virtual African Transformation Forum (#ATF2021). The report is themed “Integrating to transform” and discusses trade in Africa, among other important subjects like climate change.

  6. Avatar Abraham Apenkro says:

    when will the centre start recruiting workers?

  7. Avatar ibrahim herbeeb says:

    What will be the effect of inflation on this

    • Avatar Lamin Skandia says:

      By countries trading with each other without tariffs, this will increase trade , create jobs and boost the local economy. This will in turn reduce inflation.

  8. Avatar John Wootton says:

    What is the envisaged relationship between AfCFTA and the UK and EEC ?

  9. Avatar Francis Mwalili says:

    This is a great move by Africans for Africa! Is there a frame work in the treaty to harmonize internal and external tariff? It would be interesting to see how the tax regime would look like because this could be the strongest link or the weakest to the chain

  10. Avatar ezekiel mamabolo says:

    i want to learn more which product from south Africa my company can trade in africa.looking forward to trade with africa. need mentor on these subject of free trade and want to particapate

  11. Avatar Ofili Ugochukwu says:

    I am interested in more information

  12. Avatar Robindro Ghose says:

    Africa must stop talking but embark on concrete regional projects pooling financial and human resources, technology and innovative practices in areas such as renewable energy, transformation of plants to high value products for export, inland aquaculture, food products.

  13. Avatar ABIBU HARRY ONOABHAGBE says:

    I WANT TO BE PART OF THE TEAM, I NEED JOB

  14. Avatar Gertrude Makia says:

    As much as AfCFTA is a good initiative, looking at it from diverse perspectives will bring the change we want to see in Africa even faster. Take the Tony Elumelu Foundation (TEF) for example, that has sort out to impact Africa in the area of entrepreneurship. Measures should be put in place to ensure that African entrepreneurs can freely do business anywhere in Africa. The processes shouldn’t become rigid just because an African entrepreneur ventures business out of his or her home country, it should be lenient for Africans anywhere in Africa. I know we will get there.

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