Transformative Promise of the African Continental Free Trade

Africa is a continent with tremendous diversity, talent, and opportunity. According to the World Economic Forum, the continent has a population of about 1.3 billion people, a combined GDP of more than $3.4 trillion, and abundant natural and human resources. Africa can play a significant role in the global economy. With the benefit of emerging technologies, now is the time to push the economy toward fulfilling the 2030 Sustainable Development Goals. However, Africa also faces many challenges, such as poverty, inequality, conflict, corruption, and underdevelopment. This dichotomy underlines the importance of regional integration and cooperation through initiatives like the African Continental Free Trade Area (AfCFTA), which aims to promote unity, growth, and prosperity across the continent.

In AfCFTA, we can eliminate trade barriers, increase intra-African trade, and foster economic development. African countries can unlock their full potential and create a brighter future for all citizens. We each have a responsibility to realize this ambitious future.

For example, Africa can boost its digital economy by developing a single digital market (SDM), leveraging ICTs to foster innovation and transformation. The digital economy accounts for 15.5% of global GDP and is projected to grow to 25% by 2025. Africa lags behind other regions in digital readiness, with less than 40% of its population having internet access. Yet, it is the lowest-hanging fruit that can propel the continent to the level we desire. Investing in digital infrastructure, skills, entrepreneurship, and governance can accelerate integration into the global market and enhance regional cooperation. A continental digital economy fosters unity, empowers citizens, and allows collaboration on common challenges. This is possible under the AfCFTA framework.

In other words, integration is the basis of our bond. However, we must first overcome hurdles hindering Africa’s economic growth and integration. These are the fragmentation of its markets and the need for intra-African trade. The Brookings Institute says 15% of Africa’s trade happens within the continent, compared to 70% in Europe. Increasing intra-African trade and implementing policies that promote regional integration are crucial steps towards achieving sustainable economic growth and development in Africa. This low level of intra-African trade limits the opportunities for achieving economies of scale, adding value to products, fostering industrialization, and enhancing unity on the continent.

AfCFTA, which is incidentally the largest free trade area in the world in terms of the number of countries, is critical to address this challenge. Its purpose is to create a single market for goods and services, facilitate the movement of people, promote industrial development, and enhance competitiveness across the continent. AfCFTA is, therefore, not only a trade agreement but also a strategic framework for achieving the African people’s social, economic, and political aspirations.

AfCFTA’s primary purpose is to eliminate tariffs and non-tariff barriers in intra-African trade, establish a standard external tariff, enhance free movement, harmonize trade policies, facilitate dispute settlement, support regional value chains, strengthen regional economic communities, promote women, youth, and SMEs, advance sustainable development, and contribute to the AU Agenda 2063 and UN 2030 Agenda for Sustainable Development.

AfCFTA has numerous benefits for the continent, including increased intra-African trade, job creation, economic growth, and industrialization. The World Bank says that AfCFTA is expected to boost Africa’s GDP by $450 billion and lift 30 million people out of extreme poverty by 2035. It also enhances competitiveness, promotes regional value chains, stimulates innovation, and improves the quality and affordability of goods and services. AfCFTA also strengthens Africa’s bargaining power, promotes political stability, and celebrates the continent’s cultural diversity and heritage.

The number of signatories has increased to 54, with only Eritrea remaining outside the agreement. AfCFTA entered into force on 30 May 2019, after 22 countries ratified it, and became operational on 1 January 2021, after 36 countries deposited their instruments of ratification. The AfCFTA Secretariat, which is responsible for the administration and implementation of the agreement, was inaugurated on 17 August 2020 in Accra, Ghana.

Nonetheless, AfCFTA faces numerous challenges, especially in the context of the COVID-19 pandemic. Key issues include completing negotiations on rules of origin, tariff schedules, and investment protocols; harmonising AfCFTA with existing regional agreements; developing infrastructure for intra-African trade; mobilizing resources for least developed countries; managing potential negative impacts; protecting vulnerable groups; engaging stakeholders; resolving conflicts; and raising awareness about the benefits of AfCFTA. AfCFTA must also address potential adverse impacts, protect vulnerable groups, and involve stakeholders in its design, implementation, and evaluation.

One of the critical enablers of AfCFTA is the development of quality infrastructure that facilitates trade and integration across Africa. Infrastructure is the physical and organizational structures needed for the efficient functioning of trade, such as transportation networks, communication systems, and customs procedures. By investing in quality infrastructure, AfCFTA can help lower trade costs, increase competitiveness, and promote economic growth across the continent. This includes hard and soft aspects, such as roads, railways, ports, airports, energy, communication, standards, regulations, and customs procedures.

According to the African Development Bank (ADB), the continent needs about $130–170 billion annually to bridge its infrastructure gap, with an estimated $68–108 billion financing deficit. The lack of adequate infrastructure impedes the movement of goods, services, and people within Africa, increases business costs, reduces competitiveness, and limits the potential benefits of AfCFTA. As such, we need the courage to invest in, for example, a railway from the Indian Ocean to the Atlantic on the one hand and another from Cape Town to Alexandria in Egypt, bypassing the troubled Red Sea. These two projects could catapult productivity and reduce conflict in many countries, including nations within the Congo basin and the Eastern Sahel states.

Another critical factor for the success of AfCFTA is the free movement of people across Africa. Free movement of people means the ability of African citizens to travel, work, study, and reside in any African country without restrictions or discrimination. Free movement of people can enhance trade, tourism, education, cultural exchange, and regional integration. It can also foster a sense of African identity, solidarity, and belonging. The AU has adopted several instruments to facilitate the free movement of people, such as the Protocol on Free Movement of Persons, the Right of Residence and Right of Establishment, the African Passport, and the Single African Air Transport Market. However, the implementation of these instruments remains slow and uneven, and many challenges and barriers persist, such as visa requirements, security concerns, xenophobia, and inadequate legal and institutional frameworks. Here again, we must emulate Kenya’s bold move to enable people to move freely.

AfCFTA is a historic and transformative initiative that has the potential to reshape the economic and social landscape of Africa. It is a realization of the founding fathers of the AU’s vision of African unity, integration, and prosperity. It is also a strategic response to the challenges and opportunities of the 21st century, such as globalization, digitalization, and climate change. However, AfCFTA alone is not a panacea that will automatically resolve all challenges and deliver all benefits for Africa. It requires a strong political will, a collective commitment, and a collaborative effort from all the African countries and stakeholders, as well as the genuine partnership of the international community devoid of geopolitical maneuvers. AfCFTA is a journey, not a destination, and it will take time, patience, and perseverance to achieve its full potential and impact. AfCFTA is the basis of our bond and economic prosperity in Africa, and it is up to us to make it a reality.

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