Will Africa Rise to Sustain its Bold AfCFTA Project?

The Great AfCFTA Project
Close-up of a 1 yuan Chinese banknote (figuring Mao) and a gold nugget / rare earth metal on top of an antique map of Africa © Shutterstock

The African Continental Free Trade Area (AfCFTA) is hailed as Africa's game changer project in this century. The continent is armed with a population of over 1 billion and it has a massive number of young people. Some say the AfCFTA coming into existence should be seen as an old dream becoming a reality in a continent that once earned the tag of being a dark continent with no prospects for allowing trade to flourish and therefore unwilling to boost the lives of Africans who have suffered from the days of colonialism and even in the post-colonial context. At the very inaugural summit of the Organisation of African Unity (the predecessor of the African Union) the founding fathers in Africa sought to unify the continent and build thriving economies and improve the quality of life.

The AfCFTA agreement was adopted in 2018 in Rwanda. It officially came into force on 30 May 2019 with free trading starting on 1 January 2021. There are already high expectations on the AfCFTA. We have seen the World Bank produce a report that projects by the year 2035 that if implemented effectively, this agreement could lift 30 million Africans out of extreme poverty. The majority of these millions of Africans that could be lifted out of poverty are women in trade. It will be the opportunity to close the gender income gap and the opportunity for SMEs to access new markets.

On paper, the African Continental Free Trade Area seeks to boost intra-Africa trade, create a formidable single market, push the movement of capital and people, realise the establishment of continental customs union, improve competitiveness in the continent and most importantly boost industrial development in Africa.

The first shipments took place on 4 January 2021, during the COVID-19 pandemic. Even with the high hopes placed on the potential of the AfCFTA, especially during the pandemic, Africans are not oblivious to the challenges that are in the way. African Union’s champion for AfCFTA is none other than Niger's President Issoufou Mahamadou who has laid bare to his counterparts that infrastructure bottlenecks across Africa have been a huge hindrance to the development of intra-Africa trade.

Kenyan opposition leader Raila Odinga was appointed as AU representative for infrastructure and his appointment aims to address these impediments. He does emphasise however that their plans must be in collaboration with regional economic communities to simplify the trade regime.

The pandemic is expected to cause significant output losses in Africa. Africa’s GDP is going to be hit along with disruptions to food and medical supplies. It is being fully recognised across the continent that AfCFTA presents a short-term opportunity for countries to “build back better” and cushion the effects of the pandemic. In the longer-term, some say the agreement is expected to increase the continent’s resilience to future shocks.

The other elephant in the room for those with high hopes on the African Continental Free Trade Area is that it will not succeed as long as the continent is still facing conflicts. Basically, African states must prioritise silencing the guns. Global bodies like the World Economic Forum have also issued warnings saying without comprehensive policy making and preferential treatment for Africa's unstable economies, the AfCFTA may be a force for economic divergence as opposed to a force for good. It's quite important for countries that are participating to build efficient and robust institutional architecture to avoid leaving any economies behind. This is seen with the realisation that just three countries namely Ghana, South Africa and Egypt had established the necessary customs infrastructure for trading at the start of free trading on 1 January 2021.

With all of the challenges mentioned and some, the potential for increased intra-Africa trade, free movement of people and investments as well as self-reliance is a beacon for African reactivation. 2035 is the landmark year to target. We could see an Africa that promotes good governance in order to sustain trade integrity. We could see a more peaceful Africa liberated from short-term terrorism. The continent could be a safer space for women to trade, whether informally or formerly, benefiting from better protection through the agreement. Instead of depending solely on trade out of Africa, our collective effort to boost intra-Africa trade will protect the continent from fluctuations of global economic and political changes. Africa could be also set the example for the rest of the world, where trade agreements are being increasingly questioned.

Ultimately there exist already a string of protocols to promote development, deal with widening inequalities and have early warning systems for conflicts. Non-implementation has often stifled a lot of projects that were geared to offer relief and ease the pain of Africans who are yet to taste the benefits of freedom. The next decade will be a challenging one for Africa especially with the effects of COVID-19, however the lucrative realisation of the benefits surely do outweigh the challenges.

The analysis is written by freelance journalist Khaya Khumalo on behalf of the Friedrich Naumann Foundation for Freedom in sub-Saharan Africa.