Can Africa’s new free trade treaty boost business on the continent?

16-Feb-2024

African leaders will be convening in Ethiopia’s capital, Addis Ababa, for the 37th summit of the African Union on Saturday. During the two-day gathering, the Heads of State and Government of the African Union will discuss issues of peace, development and integration against the backdrop of resurgent coups, global food and commodity crises and heightened geopolitical competition across the continent

The integration agenda holds particular significance as global powers vie for influence over African states, evident in the growing number of “Africa summits” hosted by individual countries outside the continent in recent years

Africa faces several complex and multifaceted challenges, yet the urgent priority today must be continental integration which would remove barriers to labour and capital mobility. To this end, I urge the leaders gathered in Addis Ababa to rise above customary speechmaking and confront this challenge head-on. They can draw inspiration from the unwavering resolve of AU founders who united to alleviate the adverse effects of colonialism.

Therefore, the summit must take concrete and practical steps to accelerate the implementation of the African Continental Free Trade Area (AfCFTA), a trade regime that aims to establish a tariff-free market for goods and services. In addition, the summit should lay the groundwork for the creation of a “Made in Africa” economic corridor that would augment the continental efforts towards a pan-African marketplace

Across Africa, the boundaries of ethnic and cultural groups are often fluid and porous. It would be challenging indeed to determine where one group’s territory ends and another’s begins.

Additionally, redrawing the map of Africa would likely lead only to more conflicts. It might increase economic disparities and language barriers. Importantly, doing away with post-colonial borders would not promote the goal of a united and prosperous Africa. We must think differently.

Let us take a step back a few decades. At the inaugural summit of the Organization of African Unity, the forerunner of AU, in 1963, the founding fathers laid down a resounding vision for continental integration, unity and solidarity.

They stressed the critical need for Africans to unite in order to overcome their shared difficulties and shape the continent’s future.

There was a strong sense of optimism, resolve and dedication to cooperating for the advancement and welfare of African people. The leaders articulated a shared vision of a united Africa, free from conflict, division, and underdevelopment.

They set up African states to assume their rightful place as influential, independent nations

African leaders will this weekend gather in Addis Ababa for the annual summit of the African Union (AU) to discuss key business issues, including plans to make Africa a global economic powerhouse.

In the spotlight during the two-day high-level meeting, starting on February 17, is a treaty that the AU says will revolutionise trade on a continent where country-to-country trade levels are dismal, with most imports coming from countries like China

Ratified by a majority of African countries, the African Continental Free Trade Area (AfCFTA) agreement will merge 55 economies into a single, competitive mega market of more than a billion people, making it one of the biggest free trade areas in the world.

The AU estimates that the agreement will boost revenue and lift 30 million of Africa’s extremely poor from poverty. However, despite the big buzz around the treaty, real action has been delayed, moving back potential benefits and casting doubts on the AU’s capacity to properly pull off the plan

Here’s a breakdown of the AfCFTA agreement and what it has achieved so far:

What is the AfCFTA and what are its major promises?

First agreed in July 2019, the AfCFTA is a key pillar of the AU’s 50-year strategy to boost Africa’s economic growth

Its primary aims are to deepen economic integration in Africa by increasing the easy, cheap flow of goods and services between countries, boosting cross-country investments, removing trade barriers, and advancing open visa policies.

The AU also wants to leverage the plan to increase local manufacturing and fight for more influence in global trade where Africa currently contributes only 3 percent.

All 55 AU member states have signed the agreement – save for Eritrea – and will be represented through the eight recognised regional economic blocs, including the South African Development Community (SADC) and the Economic Community of West African States (ECOWAS). The treaty became operational in January 2021.