The AfCFTA three years on: challenges, opportunities and lessons learnt

By: Thelma Nyarhi

A Pan-African Dream.

Pan-Africanism is the idea that sees people of African descent having similar interests and needing to be unified. As a sociopolitical movement it seeks to unify Africans with the continent and diaspora. It emphasizes the need to undo the divisions imposed by colonialism and racism. From a colonial perspective trade essentially was structured in a way that benefited the colonial powers. We see this in the infrastructural development.  In as much as the colonial forces had invested in railway systems to facilitate the exportation of commodities, this kind of infrastructure only connected the natural resource-rich areas to the ports rather than promoting intra-African connectivity. Additionally, the focus on export-oriented trade left little room for African trade which led to neglect of food security and other African economy practices.  The colonial trade practices have consequently resulted in reduced economic growth in the continent. This has been largely due to economic dependency on Western parties, inequality, and lack of diversification. These lasting impacts have permeated through to contemporary era. With about 55 economies merged, a human population of approximately 1.3 billion people and GDP of approximately US$ 3.4 trillion, the free trade area has potential to be a global powerhouse and undo the impacts of colonial trade practices. The free trade agreement can be seen as one of the first steps in fulfilling the dreams of the Pan-African OAU leaders of 1963 – having an Africa that is economically, socially, and politically united. Trade in this case therefore serves as a key driver of this Pan-African dream.

The value of trade

To understand Pan-Africanism from the lens of socioeconomic perspectives it is essential to understand its link with the development in Africa and regional integration. As African leaders continue to work through the socioeconomic challenges which may include inclusive development within the continent and Africa’s global position, there is need for policy reforms and other actions capable of eradicating these issues. Pan-Africanism thus comes in as both an ideological understanding and foundational theorisation that underpins the social actions of Africans to resist and emancipate themselves from social inequalities. Pan-Africanism serves as a blueprint for African emancipation from inequality and poverty. Through its need to unify the African people we can draw on a similar ideology of Ubuntu – ‘I am because we are’. Both ideologies challenge the individualistic and competitive nature of Western ideologies. The synergy between Pan-Africanism and Ubuntu can be seen through the AfCFTA. In its quest to unify the African market it rests on the ideas of interconnectedness and interdependencies amongst nation states. As one of the flagship projects of Agenda 2063, AfCFTA serves to address the problems of colonialism that left the continent divided with fragmented economy markets.

The fragmentation led to poor economic performance that further aided the increased poverty rates. Essentially AfCFTA is one of the key programmes identified as key to accelerating Africa’s economic growth and development. To reverse the colonial effects the AfCFTA aims to accelerate intra-African trade thereby boosting the continents trading position in the global market. This is envisioned to be made possible through the elimination of tariffs and non-tariff barriers as well as replacing the fragmented bilateral and regional trade agreement relations with a unified market. With approximately 18% of the world population, Africa accounts for just 2% of global trade and a GDP of 3%. These numbers though bleak offer Africa potentials as well as challenges. In terms of opportunities, it encourages the African countries to industrialize more and trade amongst one another. Trade has for the longest time been the driver for linking communities thus encouraging social cohesion. This feeds into the goal of interconnectivity and interdependence.

Tracing the AfCFTA

On 21 March 2019, the agreement establishing the AfCFTA was signed in Kigali, Rwanda. The AfCFTA then only entered into force on the 30^th of May 2019. The Operational Instruments governing trade under the AfCFTA were then only launched in Niger in July 2019. This was then followed by trading, which officially commenced on the 1^st of January 2021 under the AfCFTA. Part of the AfCFTA objectives included enhancing the competitiveness of the economies of State Parties within the continent and the global market; promoting industrial development through diversification and regional value chain development, agricultural development and food security; creating a single and liberalised market for goods and services, facilitated by movement of persons in order to deepen the economic integration of the African continent; promoting and attaining sustainable and inclusive socioeconomic development, gender equality and structural transformation of the State Members. These objectives although essential to the development of the continent, the continent still faces significant challenges in fulfilling them.

What lessons can be drawn?

The AfCFTA in as much as it is an ambitious trading pact agreement it has over the years enjoyed some successes as well as faced some challenges. These all oscillate around the idea of implementation. With regards to its implementation, it has been successful in the sense that it introduced Guided Trade Initiative (GTI) which was a strategic approach that was piloted to showcase trade under the AfCFTA trading preferences. Eight nation states participated these included Ghana, Kenya, Cameroon, Rwanda, Mauritius, Egypt, Tanzania, and Tunisia. The GTI essentially demonstrated the possibilities of the AfCFTA. Through its initiative select products earmarked for trade for example tea, dried pineapples were exported by for example Cameroon to the other participating countries. This has essentially increased intra-African trade as well as prompted export diversification. On the objective of agricultural development and food security stipulated by the agreement, there has been a reduced need to import agricultural products thereby boosting the domestic economies. Contrastingly however, there are some countries who fail to implement this goal. Despite AU leaders having pledged and signed the Maputo Declaration of 2003 which stipulates a mandatory 10% budget allocation by the state to the agricultural sector, many still allocate below 3% thereby compromising the agricultural sector. This sets it back and ideally affects the agricultural production thereby affecting the implementation of the trade agreement.

Furthermore, the lack of political will within the trading bloc where possible tensions or conflicts within regional blocs or neighbouring state parties may arise tend to also affect the flow of trade. For example, in the context of Democratic Republic of the Congo and Rwandan tensions or the Economic Community of West African States (ECOWAS) and Niger, Mali tensions, intra-African trade activities may be halted as result of political unrest and or sanctions. Additionally, the issue of labour migration also presents its own complexities particularly when thinking about it through present realities of xenophobia and Afrophobia. The othering, criminalisation etc of migrant labour essentially contributes to the challenges of the AfCFTA implementation. Labour is a crucial entity to economic growth and the movement of workers across borders often encounters localised frictions which draws on state policies that often work against migrants. The complexities of border management or excessive bureaucratic systems also hinder the free movement of goods and services within the continent. This is seen for example in the South African case that has revised migrant policies and essentially contributed to the immobilization of migrants. Moreover, infrastructural deficits seen in the poor road and railway systems also contributes largely to the challenges of implementation.

What can be done?

A lot still needs to be done particularly in facilitating AfCFTA implementation amongst state parties. The key priority areas include infrastructure development, trader engagement, public awareness, peace and security, industrialization, and collaboration. These key priority areas rely on genuine political will from state parties. With continued conflict and tensions not much economic or trading activity can be done. Peace and security are thus important in ensuring the flow of economic activities. There is need for continued collaborations particularly as seen in the bilateral agreements which essentially waiver visa and or permit requirements amongst states thereby increasing the free movement of labour. Additionally, there is need for industrialization which can better the regional value chains thereby creating finished products that can benefit its consumers and limit over reliance on the Western market. Lastly there is need to invest in infrastructural development particularly in regional or cross-border areas to increase goods and services flow.

Thelma Nyarhi is a research intern at the Democracy Development Program (DDP) and writes in her personal capacity.