AfCFTA; 75 Days After – What progress has been made?

After the political
launch of the AfCFTA (“The Agreement”) which clearly was in the right
direction, the real challenge that stares in the faces of every African policy
maker, entrepreneur and investor is how do we ensure that its impact materializes
at scale and in a timely manner. Great expectations greeted the kick-off of the
Agreement and as it has now entered its third month, however, the full benefits
or even a significant benefit has not been seen just yet. This short note
examines the implementation of the Agreement, 75 days after its kick-off. It
considers the gains, the challenges and offers the way forward.

Gains:

The Agreement started
off with the vision of creating one African market and a mission of
accelerating intra-African trade and boosting Africa’s trading position in the
global market by strengthening Africa’s common voice and policy space in global
trade negotiations.

It is a point that
bothers repetition that the global pandemic has hampered all round economic growth.
However, as an economic lifting policy, stakeholders expect the Agreement to
serve as the ultimate palliative to the economic throes made worsened by the
pandemic. On that score, it can
be said that understandably, not much has been seen in terms of significant
gains so far. However, it is our view, that the progress of the Agreement so
far should not be assessed on ‘significant’ progress but more in terms of the
infrastructure put in place by stakeholders for a full implementation. So far, 35 Countries have ratified the Agreement
and 54 of the 55 African Union countries have signed the Agreement.

As of today, Africa
is in a position to start trading on over 81 per cent of products on
preferential terms. These goods form part of the initial trading, while
negotiations on the remaining are on going and will be concluded by July 2021.

Also, only Egypt and
South Africa have set up their trade remedy authorities. Nigeria is on the
verge of registering theirs and it has been argued that these trade authorities
have the potential to prevent dumping and issues related to trade disputes.

In all, it can be
said that the Agreement holds promises and to achieve its aims, a collaboration
between both the State governments and the private business and inter se is
required.

Challenges

Despite the promises,
the challenges are aspirating. The walk to full implementation is a long one.
If there are no basic infrastructure, full implementation will never be achieved,
and any such aspiration can only be meaningless. To put in context, if there
are no efficient means of transportation for example, the movement of persons
and goods can never be efficient. Intra-African trade is still
bedeviled by the lack of quality and affordable infrastructure, especially when
it comes to road and railway networks. Africa in the present circumstance needs
to adopt a pragmatic approach and prioritize the development of critical
transport infrastructure that has the potential to increase regional
integration, facilitate mobility and strengthen markets’ competitiveness.

Way forward

The promises of free
trade are transformative, and the implementation of the Agreement will unlock
growth and integration, but the stakeholders must commit to act on the
following conditions[1],
if any real success is to be achieved. These include:

(a)  
Continue steadfastly on their commitments to
implement the agreement.

(b)  
Harmonize trade policies across states, regions
and the globe.

(c)  
Develop and institute mechanisms to eliminate
all barriers to trade.

(d)  
Build capacity in each member to effectively
implement VAT monitoring systems.

(e)  
Build and improve infrastructure, including information
and communications technologies, to expedite and smooth trade across borders.

(f)   
Facilitate diversification of Africa’s economies
and export profiles, such as through industrialisation and a focus on higher
value-add goods and services.

(g)  
Uphold good governance practices and reduce
corruption.

(h)  
Enhance monitoring of cross – border flows of
goods and services.

(i)   
Leverage demographic expansion by investing in
human capital and harnessing a large labour force.

There must also be an
efficient platform to facilitate a partnership between decision-makers and
business leaders. The private sector must be called and should have a seat at
the table, and as a continent, we must prioritize investments in transport
infrastructure. There is also the important call for governments to embrace new
modes of financing.

According to the chief
of staff of the AfCFTA Secretariat, Silver Ojakol “Economic integration is not
an event. It’s a process.” Certainly, building the world’s largest free trade
area will not happen overnight, however, its success depends largely on what we
do next, and where we focus our efforts.

[1] ‘Conditions
for success in the implementation of the African Continental Free Trade
Agreement’ work commissioned by the African Union Development Agency
(AUDA-NEPAD). Accessed from: https://www.nepad.org/publication/conditions-success-implementation-of-african-continental-free-trade-agreement.
Accessed on 03/07/2021.  

For further information on the foregoing (none of which should be construed to be an actual
legal advice), please contact:

afcftadesk@ao2law.com

For further information on the foregoing (none of which should be construed to be an actual
legal advice), please contact:

afcftadesk@ao2law.com

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For further information on the foregoing (none of which should be construed to be an actual
legal advice), please contact:

afcftadesk@ao2law.com

Chinedu Anaje

Managing Partner

chinedu.anaje@ao2law.com

Antiaobong Akpan

Associate

antiaobong.akpan@ao2law.com

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