IDEA Hails the Africa Continental Free Trade Agreement (AfCFTA)

IDEA Editorial                                                 March 30, 2018

Ghelawdewos Araia, PhD

We at the Institute of Development and Education for Africa (IDEA) are delighted to witness the launching of the continental free trade area that would, in effect, supersede all existing regional blocs like ECOWAS, SADC, COMESA, etc without contradicting or contravening the mission and objectives of the latter. At long last, the Africa must Unite motto of the 1958 Accra conference, then attended by only eight independent African countries, will become a reality. On May26 1963, the pan-African movement to unite Africa culminated in the signing of the OAU Charter by 31 African countries. The OAU became AU (African Union) in May 26 2001, and between the establishment of the Organization for African Unity (OAU) and AU, a significant number of regional organizations were founded, but the idea of integrating the entire continent was conceived long before the AfCFTA was signed by forty-four African countries on March 21, 2018 at Kigali, Rwanda.

In 1991, i.e. 27 years ago, African countries have signed an agreement at Abuja, Nigeria in regards to the formation of African Economic Community; to this effect, some blocs like the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA) signed an agreement to create a trade bloc of 26 countries. Following the SADC/COMESA agreement, African trade ministers have reached an agreement at continental level on December 2017, and it is based on all these initiatives that the AU announced on January 2018 of the signing of the AfCFTA on March of the same year.

With the exception of some countries like Nigeria, Uganda, and Burundi, the majority of African countries have endorsed the AfCFTA, and the new continental trade regime will come into effect by 2020 if the Agreement is ratified by 22 countries, a number that is necessary and required for the legitimacy of the new African free trade.

Once it comes into full force, the AfCFTA, will have a major impact on the industrial development and trade linkages of the respective African countries. First and foremost, it will effectively integrate the African continent via open borders, transcending regional bloc regimes, eliminating tariffs, reforming customs and border regulations, and attracting both African and international investors. The AfCFTA, above all, will enable African countries to promote export-led industrialization, and as a result a new wave of export-oriented goods will become the dominant facet of the AfCFTA intra-African trade and the collective trade of the continent with Europe, Asia, North and South America, as well as the Caribbean. The new Africa continental trade, thus, will stimulate foreign direct investment (FDI), while at the same time exploiting the potential of 1.2 billion people and a $3.4 trillion combined GDP.

However, in order to meaningfully and effectively translate its mission and objectives, the AfCFTA must meet some preconditions ahead of time: 1) African countries must diversify their economies and graduate from a monoculture commodity production to a wide ranging agricultural and industrial output; 2) African countries must expedite industrialization and promote value-added products (or manufactured goods) for African and world markets; 3) as agreed upon in the Kigali summit, tariff and non-tariff barriers should be eliminated in order to significantly boost intra-African trade; 4) the AfCFTA must resolve the multiple and overlapping membership of trade blocs as stipulated in Article 3 of the Preamble of the Agreement; 5) the AfCFTA must be accompanied by security measures in order to ward off counter-progressive forces such as Al Shabab and Boko Haram, and sabotaging underground activities such as contraband illegal transactions; 6) the AfCFTA should seriously consider the uneven development level of African countries and make necessary adjustments, including affirmative action and subsidy programs.

On top of the above preconditions, the AfCFTA should also meet the following criteria: 1) the AfCFTA, as a matter of course, should have a visionary and capable leadership and an efficient and effective structure; 2) the AfCFTA must have a strong evaluating and monitoring system; 3) the respective member countries of the AfCFTA must initiate infrastructures such as highway roads and railway communication networks as well  as power services in order to attract investors.

If the above preconditions and criteria are fulfilled, Africa can boast a higher percentage of intra-African trade. Currently, the intra-African trade of 16% is relatively low compared to 19% of Latin America and 51% of Asia, but it is highly probable that Africa could garner 52% of trade if the preconditions and criteria are met.

One promising thing that the AfCFTA could be effective has to do with the design and structure of the continental regime. Although the AfCFTA is accountable to the AU, it will assume an autonomous status and will have its own secretariat; it will be led by heads of states conferences or semi-parliament, and a committee of senior trade officials; and it will incorporate specialized professional bodies yet to be negotiated.

Africa has been staggering to rise up for the last five decades, and now, it looks, the time has arrived for Africa to stand up on its feet; fifty-four strong feet (fifty-five, if Somaliland is added) to march together and pull together (harambee); the ultimate objective is not only to create a free continental trade area but also to connect Africa by railway from Dakar, Senegal to Djibouti and by road from Cairo to Cape Town; furthermore, the objective is to uplift Africans from poverty; to reassert ancient and medieval African civilizations; and to encourage African lions to roar in an effort to symbolize the reemergence of Africa.