Twelve months after the official start of trading under the African Continental Free Trade Area (AfCFTA) agreement, a South African professor, Carlos Lopes fear that the project may be losing its steam.
According to african.business, despite the “fantastic surprise speed” of progress in 2020, “the AfCFTA seems to be losing the momentum it gained amongst African leaders at the very time its importance is recognised elsewhere,” says Carlos Lopes, professor in the Mandela School of Public Governance at the University of Cape Town.
“This apparent paradox has to be dissipated fast,” he warns.
Lopes argues that while the Covid-19 pandemic is responsible for slower progress in getting the AfCFTA up and running, the real stumbling blocks lie in three elements that are eroding consensus:
• the never-ending discussion on the rules of origin, which is the intersection between trade and possible industrial policy;
• the interference of external partners pushing their agenda of divide and rule (with Kenya’s free trade deal with the US a case in point);
• a lack of capacity in the Secretariat to push the agenda, given its launch in the middle of the pandemic.
In this article we look at the background to the AFCFTA, catch up on progress towards its full implementation and consider whether it really is losing its way.
READ: Africa: AfCFTA may increase Nigeria’s imports by 251% – Report
What is the AfCFTA?
The AfCFTA is an ambitious trade pact to form the world’s largest free trade area by connecting almost 1.3bn people across 54 African countries.
The agreement aims to create a single market for goods and services in order to deepen the economic integration of Africa. The trade area could have a combined gross domestic product of around $3.4 trillion, but achieving its full potential depends on significant policy reforms and trade facilitation measures across African signatory nations.
The AfCFTA aims to reduce tariffs among members and covers policy areas such as trade facilitation and services, as well as regulatory measures such as sanitary standards and technical barriers to trade.
The agreement was brokered by the African Union (AU) in response to a growing realisation that trade integration across the African continent has long been limited by outdated border and transport infrastructure and a patchwork of differing regulations across dozens of markets.
The low level of intra-African trade in comparison with that between countries on other continents in particular reflects the continent’s position as an exporter of raw materials to the rest of the world. It is hoped that the AfCFTA will greatly boost Africa’s industry and agriculture.
Initial progress on developing the AFCFTA was relatively rapid and an agreement was signed by 44 of the AU’s 55 member states in Kigali, Rwanda on March 21, 2018. The only country still not to sign the agreement is Eritrea, which has a largely closed economy.
Trading under the agreement commenced in a limited form on 1 January 2021, after a sixth month delay as a result of the impact of Covid-19.
Although trading has officially been launched, negotiations on many issues need to be resolved before the agreement can fully function. The negotiations have been divided into three phases:
• Phase 1 negotiations – trade in goods and services.
Negotiations led to the ratification of legal instruments (the AfCFTA agreement itself and protocols on trade in service and goods and settlement of disputes) that came into force on 30 May 2021, permitting the launch of trading. However, negotiations continue on many details (see “Update on progress” below).
• Phase 2 negotiations – intellectual property rights, investment and competition policy. Some of these negotiations have already begun (see “Update on progress” below).
• Phase 3 negotiations – e-commerce. These negotiations are due to begin when phase 2 is complete.
