AfCFTA: Milestones and Challenges

Data from the United Nations show that intra-African trade represents 14.4% of total African exports¹ . This means that a large part of African trade happens between Africa and counterparts outside of the continent. In comparison, trade inside the EU represents 60 percent EU trade. Similarly, trade inside the North American Free Trade Agreement (NAFTA) generates 40 percent of world trade while The Association of Southeast Asia Nations (ASEAN) accounts for 30 percent. The purpose of the African Continental Free Trade Agreement (AfCFTA) is to reverse Africa’s skewed trade.

The objectives

The primary goal of AfCFTA is to deepen the economic integration of the African continent through a single liberalized market for goods and services. This continental trade initiative cannot work without a free movement of capital and of Africans across borders. Other prerequisites for an effective trade zone are an harmonize business law and a common continental customs framework. The AfCFTA project includes measures to remove non-tariff barriers to trade between the five regional economic communities (North, East, West, Central, and Southern Africa). Under the agreement, countries will reduce tariffs of up to 90 percent on liberalized goods by 2030.

The trade institution wants to foster cooperation in investment, intellectual property rights, and competition policy. As a multilateral organization, the AfCFTA will also be able to develop rules on trade dispute through the Dispute Settlement Body (DSB), address trade conflicts and also improve payment mechanism to facilitate trade. According to the International Monetary Fund (IMF), Africa has 41 national currencies and 84 central banks. The trade agreement will strives towards a unified medium of exchange to reduce the complexity of trade.

Treaty and pilot trades

AfCFTA launched its operational phase on July 7th, 2019 during the 12th Extraordinary Session of the Assembly of the Union on the AfCFTA in Niamey, Niger. Officially, trading under the AfCFTA Agreement began on January 1st, 2021. As of August 2023, 47 of the 54 African countries (87 percent) have ratified the trade agreement.².

In February 2022, eight countries representing the five regions of the continent took part in the pilot Guided Trade Initiative (GTI). They included Cameroon, Rwanda, and Ghana (for West and Central regions), Kenya, Mauritius, and Tanzania (in East Africa) and Tunisia Egypt in North Africa. These countries traded nine products, including ceramic tiles; batteries, tea, coffee, processed meat products, cornstarch, sugar, pasta, glucose syrup, dried fruits, and sisal fiber.

During the pilot trades, Cameroon issued two certificates of origin to two domestic food companies: the Cameroon Tea Estate and the Ndawara Tea Estate. These two companies exported Cameroonian tea to Ghana under the new continental reduced tariff. In a similar move, Tunisia shipped 60 tons of resin worth US$92,000 (around TND 204,000), which arrived at the Cameroon port of Kribi on July 3rd, 2023. Kenya shipped car batteries to Ghana worth US$77,000 (Sh9. 24 million) to Ghana. In return, two Ghanaian companies (Ghana Benso Oil Palm Plantation Limited and Keda Ghana Ceramics Company Limited) exported palm oil products to Kenya and ceramics to Cameroon.

The GTI was a powerful communication exercise but also a genuine test of the commercial viability and operational infrastructure that the continent needs to conduct trade. It also tested the responses of individual domestic legal systems and trade policies. The trade pilot schemes helped the AfCFTA Secretariat to gather the first empirical economic data on trade under the AfCFTA.

Institutional developments

On April 2021, the AfCFTA Dispute Settlement Body became operational and held the first meeting on April 26th at the AfCFTA Secretariat. During the same year, the Pan African Payment and Settlement System (PAPSS) became operational online.

On May 16th, 2022 in Dakar, Senegal, AfCFTA launched the ATEX, which is a Business-to-Business (B2B) tool that targets African businesses. ATEX helps African companies to find new markets in Africa, for example, to purchase commodities they need for their production. On July 2022, the organization launched the AfCFTA Rules of Origin Manual, as part of the AfCFTA e-tariff book.

Challenges

The first challenge stems from the slow compliance with the treaties on the free movement of people. In Sub-Saharan Africa, the free movement of people is a significant stumbling block to the AfCFTA project. The picture across the continent is gloomy with little prospect for change in the short term. In December 2022, the African Development Bank published the 2022 Africa Visa Openness Index, which shows that only three countries in Africa (out of 54) offer visa-free entry to fellow Africans. On November 3rd, 2023, Rwanda became the fourth African country to offer visa-free entry to Africans. In January 2024, Kenya and Ghana announced plans to end visa requirements to African visitors.

ECOWAS region continues to have ‟stumbling blocks” in the free movement of people according to media think-tank African Liberty ⁵. The Economic Community of West African States (ECOWAS) adopted the principle of free movement of people in 1979. Other economic zones continue to maintain conditions for the movement of people. There has been little progress in the free movement of people in the Economic Commission of Central African States (ECCAS) since 1983, when the region adopted a free movement protocol. Gabon and Guinea Equatorial continue to practice mass deportation of ECCAS citizens. In the Republic of Congo and the Democratic Republic of Congo, an endemic culture of corruptions and harassment by immigration and police persists at borders posts. These obstacles are serious impediments to trade and free movement.

In East Africa, citizens of Kenya, Rwanda, Uganda and Tanzania have enjoyed a relative free movement across the four countries since 2013. But the rest of East African countries continue to impose visa to their fellow neighbors. In Southern Africa, the rise of xenophobia in South Africa cast doubt on the operationalization of AfCFTA in the region.

In North Africa, AfCFTA is facing egregious and violent pushbacks. In Tunisia, xenophobic discourse and violent rhetoric against illegal migration is in contradiction with the country's committment to the AfCFTA project. In February 2023, the African Union Commission condemned Tunisian authorities for targeting fellow Africans with hate speech. In a statement, Moussa Faki Mahamat, the Chairperson of the African Union Commission (AU), said that the AU ‟strongly condemns the shocking statement issued by Tunisian authorities targeting fellow Africans which go against the letter and the spirit of our Organization and founding principles ”.

The second challenge pertains to the harmonization of regulations and policies. Competing and often conflicting national regulations hamper intra-African trade. The AfCFTA ‟Private-Sector Engagement Strategy” selected sectors, which it describes as high potential. They include agriculture, pharmaceutical, transport (and logistics). AfCFTA selected these sectors for their potential to meet African demand through local production, as well as their potential as export items. Together, these four sectors represent $130 billion in goods and services imports.⁶.

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