The African Continental Free Trade Area: A Needed Step Towards an Economically Free Africa

When the news of the historic adoption of an Agreement on the African Continental Free Trade Area (AfCFTA) by the African Union (AU) visited me, I exclaimed: “Alas, there is hope for a better Africa!” With the signing of this treaty, the lines that divide our beautiful continent are on the course to being erased; the walls left behind by colonialists and maintained by imperialists are being brought down.

Leaders of 44 out of 54 African Union member countries, on Wednesday 21 March 2018, signed the deal during the 10^th Extraordinary Summit of Heads of State and Government of the African Union, in the Rwandan capital, Kigali. The deal, in many ways, represents the dawn of a new beginning for the continent in terms of regional integration and economic growth.

The vision of the free trade agreement encompasses 1.2 billion people stretching from Durban to Cassablanca, Mombassa to Douala, and would be instrumental in turning the African Rising narrative into a reality. The agreement would boost trade between African countries and build an integrated market in Africa that could move the continent’s GDP to 2.6 trillion USD. Theoretically, under the agreement, all the African signatory countries would have to agree to reduce the trade tariffs and import quotas between each other. With labour freely flowing between African countries, there is a huge potential that the treaty will create hundreds of thousands of jobs, thereby significantly reducing unemployment among the continent’s youthful population. In liberal thought, this should also boost peace and security on the continent.

It is hoped that the agreement will come into force in the next six months, albeit it will need to be ratified by the national parliaments of the signatory countries before the bloc becomes a reality. The ambition is to take further steps that echo the creation of something European Union-esque with a view to possible integration. A customs union, where each country would have the same tariffs with the outside world and low or no tariffs between each other, would be the next step. Then, a common market will need to follow. In essence, what this means is that duty free trade and free movement of labor and capital among members of this bloc must ensue. Besides, the continent will then have to have a common trade relationship with the rest of the world. Further integration would involve a political union and a single African currency. 

But many obstacles still have to be overcome. New fissures are emerging and old fractures dividing the continent appear to be growing. Even before it was signed, the deal had already hit its first hurdle. Nigeria pulled out of the summit because "certain key stakeholders in Nigeria indicated that they had not been consulted, for which reasons they had some concerns on the provisions of the treaty". Commenting on Twitter, Nigeria's President Buhari remarked: "We will not agree to anything that will undermine local manufacturers and entrepreneurs, or that may lead to Nigeria becoming a dumping ground for finished goods."

Nigeria is the continent’s largest economy and most populous, and its “key stakeholders,” the country’s business community and its trade unions, particularly fear a free trade area would see the free movement of labour across borders, providing a possible threat to Nigerian jobs. This raises questions about the AfCFTA’s viability.

South Africa, also one of Africa's largest economies, did not sign the agreement. But President Ramaphosa stated his commitment to the agreement once the necessary legal processes are undertaken, and did sign the Kigali agreement on the establishment of the AfCFTA, observing that: “this is an opportunity that is going to yield great benefits for all countries on the continent as well as big business, small companies and micro-traders.”

In total, 10 countries did not sign the agreement although the list of these countries was not immediately available. For now, let us hope Nigeria, South African and the other eight countries with reservations do sign at a later date.

Now, even if all 44 signatories to the agreement do eventually agree to ratify it, how long will it take before the treaty can put to use? After the ink dries and the officials have all gone home, how soon will it make a difference on the ground? Until a business can move its goods from any country in the Free Trade Area to another almost as if borders are nonexistent, the proclamations on paper will count for very little.

A second challenge is the number of countries in Africa that need to ratify the agreement. When the European integration process started in the early 1950s, just six countries were involved. More than 60 years later, the European Union has 28 members. Africa has 54 countries; only 44 have signed the treaty. It remains to be seen how many of these will ratify it. If it is ratified, the bloc will be the largest in the world by member states. But from experience, how long will it take the required political wheels to turn for this to happen? Your guess is as good as mine. As a matter of fact, the African Union had planned the implementation of the continental free trade area in 2017 but missed this date. Do not ask me why its signing only had to happen one year later.

For the free trade area to really work, there must be significantly more intra-African trade. But a relatively low level of manufacturing takes place on the continent where trade often means selling raw materials to the outside world. In fat, currently, most African countries tend to trade more with the outside world than they do with their fellow African states. Indeed, intra-African trade accounts for about 16% of the total; in Asia the figure is 51% and in Europe it rises to 70%. Given the increasing hostility of the international economic order, this deal is a welcome step for Africa if it is to move forward. As the European Union has shown, regional integration and a growing internal market could play an even more important role in the African development process.

But, if this is to see the light of day, we must find common ground and jointly agree that the need for economic independence is undeniable. How quickly this happens will be dependent upon the political will of all who penned the deal and their respective parliaments. Only when the required political will from African leaders has been summoned can Africans truly believe they will enjoy the fruits of this free trade area agreement.

Let us hope they get this treaty up and running as quickly as possible. The AU Commission Chair Moussa Faki Mahamat could not have echoed this desire more fervently when he remarked: “Our people, our business community and our youth, in particular, cannot wait any longer to see the lifting of the barriers that divide our continent, hinder its economic takeoff and perpetuate misery, even though Africa is abundantly endowed with wealth.”

Hubert Kinkoh, M.A.

Fellow at African Leadership Centre