On the first day of 2021, Africa made history as a collective continent by economically uniting to ratify a free trade agreement for the first time in the history of a politically independent continent. On that same historic day for African economic unity, the almighty European Union sealed their economic separation with the United Kingdom in what has now come to be known as BREXIT. 

What a historic coincidence between the former colonizers and the formerly colonized! 

Interestingly, talks of the urgent need for African unity began several decades before the Europeans first thought about the idea of a European Union as one economic trading zone. 

However, the Europeans first succeeded to unite ahead of Africa, economically and politically. Africa no doubt has observed over the years the gargantuan benefits of an economic union with the success story of the EU. Coincidentally, Africa found its grounds for economic unity at a time the European Union is facing hindrance with BREXIT. 

AfCFTA’s take off was further delayed after decades of discussions by the abrupt interruption of the global COVID-19 public health pandemic. Nonetheless, African leaders decided that they couldn’t allow further delay of the free trade agreement while the zeal was still there.

 The long overdue Africa continental free trade area therefore, took off officially and practically at the start of this year.  If successful, AfCFTA will be the biggest free trade economic bloc in the historic books of the World Trade Organization. It is the biggest bloc because it has the greatest number of participating countries. 

With the exception of Eritrea, every single African nation has ratified the AfCFTA agreement.

Expression Of Hope From African Leaders

Many African leaders expressed excitement about the historic African union trade agreement at a time when African unity appears to only remain an empty rhetoric. 

President Cyril Ramaphosa of South Africa, for example, expressed his excitement on the eve of the agreement by saying, “We are just a few hours away from the birth of the African Continental Free Trade Area, which will fundamentally change the economic fortunes of our continent. It is the start of a new era of trade between African countries where we will collectively realize the great potential of our abundant natural and human resources.”

According to the AfCFTA secretariat located in Accra Ghana, the trade agreement covers a 1.2 billion market with a collective resulting GDP of $3 trillion covering 54 out of the 55 member countries of the African Union.  These statistics are undoubtedly impressive.

When he was handing over the AfCFTA secretariat to the AU commission in Accra, the Ghanaian President Nana Akufo –Addo said ‘’A large part of the growth that we seek on the African continent will come from us trading among ourselves. We in Ghana believe that an increase in trade amongst ourselves is the surest way to deepen economic integration in Africa.’’

President Akufo-Addo also used the Covid-19 global pandemic as more reason why AfCFTA is necessary at this moment in intra-African trade history. ‘’The pandemic has heightened the importance of the success of AfCFTA. The disruption of global supply chains has reinforced the necessity for closer integration amongst us, so that we can boost our mutual self-sufficiency, strengthen our economies and reduce our dependence on external sources.  

He continued, ‘’We’re now the largest free trade area since the formation of the world trade organization and we must make it count’’.

Rwanda’s President Paul Kagame stated that AfCFTA had culminated in the AU’s ‘’most consequential undertaking thus far’’ adding that ‘’the future of Africa’s farmers, workers and entrepreneurs, particularly women and young people was at stake’’. 

Single Market Area

This single African market for goods and services aims to boost trade among member nations with historically low internal trade among themselves. It is a well-documented fact that African nations have historically traded more with Europe, America and Asia in much higher volumes than within its own markets.

Take 2017 for example. According to the world trade organization, export trade among African countries amounted to a mere 16.6% of total export trade while 68% of African export trade was between Africa and Europe.  Even Africa – Asia trade amounted to a whooping 59% of total African exports. This is despite the ridiculous tariffs and trade barriers that African exporters constantly face with European and Asian markets. 

The UN economic commission for Africa estimates that in the short to medium term, AfCFTA will increase intra-African trade from a mere 16.6% to about 50%. This will still be a pale comparison to the volumes and value of intra-EU trade that stood at 80.8% of total exports of goods and services in 2019. 

Benefits To Africa

With AfCFTA, a continental customs union has been envisioned where 90% of tariffs will be removed for intra-Africa goods. And if successfully done, this will facilitate the free movement of human resources and available capital between African countries. In addition, external investments will improve while reducing other non-tariff barriers such as inefficient timing for the movement of goods via customs.

The UN Conference on Trade And Development (UNCTAD) has calculated that cutting intra-African trade tariffs through AfCFTA could bring $3.6 billion in welfare gains to the continent through a boost in production and cheaper goods. 

In a similar forecast of AfCFTA benefit for the global market, the World Bank thinks the agreement could add $76 billion in income for the global economy as a multiplier effect.

Not Without Road Blocks 

There is no doubt that AfCFTA is historic for the African continent. However, the history of making agreement may remain in the books unless the agreement can be made practical for the benefits of the 1.2 billion populations of the member countries rather than for a few monopoly capitalists.

Doubters have raised a number of practical concerns. These include how an African continent that lacks modern and efficient infrastructure can efficiently implement such a lofty free trade agreement to benefit her people while keeping away opportunistic foreign capitalists. The AfCFTA secretariat hasn’t been forthcoming with all the information that concerns the processes. This lack of sufficient information has created a big room for negative speculations. 

And as we know, women-led businesses dominate the African market with so many barriers. Yet, it is not yet clear how these low level barriers will be removed for this crucial reproductive segment of the populations.

 Moreover, AfCFTA did not foresee the economic devastation of Covid-19 and do not have ready made contingency measures.  This has the potential to roll back the economic benefits of the agreement. 

Many have expressed concerns that multi-national companies will usurp small African business with Western monopoly capital in order to reap the economic gains of AfCFTA. This could further facilitate the deepening of neo-colonialism or economic colonization, the new phase of imperialism in Africa. 

To give more hope to the agreement, the AfCFTA secretariat need to be more forthcoming with information to water down these lingering doubts among many Africans and other economic and political observers.

The trade bloc’s newly elected secretary-general Wamkele Keabetswe sought to assure skeptics by telling the press upon taking office that, “We want to move Africa away from this colonial economic model of perpetually being an exporter of primary commodities for processing elsewhere. We want to stop approaching tariffs as a tool for revenue. We want tariffs to be a tool for industrial development.”

Is this assuring enough? Only time will tell. 

By: Sacut Amenga-Etego