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.