African leaders have signed an agreement to set up a massive free-trade area. This will help to improve regional integration and boost economic growth across the continent. The deal to create the African Continental Free Trade Area (AfCFTA) was signed at an extraordinary summit in Kigali, Rwanda by representatives of 44 of the 55 African Union (AU) member states.
Only 16 percent of Africa’s trade takes place between countries on the continent today, according to the union. The commission expects that number to jump to more than 50 percent if all 55 nations sign on to the pact. Speaking on the issue AU Commission Chair Moussa Faki Mahamat said,
“Our peoples, our business community and our youth, in particular, cannot wait any longer to see the lifting of the barriers that divide our continent, hinder its economic takeoff and perpetuate misery, even though Africa is abundantly endowed with wealth.”
Albert Muchanga, the commissioner for trade and industry at the African Union Commission, which oversaw the negotiations, said the new agreement also aimed to create jobs and broader economic diversification. Consequently, the continent will overcome reliance on exporting resources like minerals and oil, and by reducing non-tariff business hurdles, like onerous regulation. He also said yearly monitoring and evaluation will yield better results for this agreement than for its regional predecessors.
Why Some Countries Did Not Sign
The list of all countries that did not sign the agreement was not immediately available. We do know that some of the countries holding out include Nigeria, South Africa, and Zambia. New York Times reported that of the 11 holdouts, Nigeria and South Africa represent $700 billion — or one-third — of the $2.1 trillion in gross domestic product across all 55 African countries. The two countries are also home to 242 million people, or 20 percent of Africa’s population of 1.2 billion.
Nigeria pulled out of the signing ceremony after President Muhammadu Buhari canceled his attendance on Sunday. A statement at the time said the decision was made “to allow time for broader consultations”. Buhari who has since set up a presidential committee to take two weeks widening consultations on AfCFTA, believes that the economic and security implications of Nigeria signing the deal must be further discussed.
“We will not agree to anything that will undermine local manufacturers and entrepreneurs, or that may lead to Nigeria becoming a dumping ground for finished goods.”
Olusegun Obasanjo, a former president of Nigeria and an elder statesman on the continent, called the Buhari administration’s reluctance “criminal”. This is according to KTPress, a Rwandan news outlet. In an interview, the former president said,
“I am surprised that any African leader at this time would be doubting or debating the benefits. The signing and implementation of the African Continental Free Trade Area (AfCFTA) will enable a shift from dependence on assistance to increased trade. The establishment of the Free Trade Area will result in the establishment of a market of over one billion two hundred million people. This combines with a gross product of over three trillion dollars. That is where our salvation lies; trading amongst ourselves and consequently developing our economies. The agreement will inspire a change a perception of the continent by the rest of the world.”
South Africa’s Reasons
Cyril Ramaphosa did not sign the crucial agreement at the African Union (AU) Extraordinary Summit in Rwanda’s capital Kigali. However, he signed the declaration on the establishment of the African Continental Free Trade Area (AfCFTA). Ramaphosa said that his government welcomed the “historic moment” saying that it had been dreamt of by the founding fathers of the AU. Furthermore, he said South Africa was pledging itself totally to opening up trade by signing the declaration. According to the president,
“We are part of this process of opening up Africa for trade. All that is holding us back from signing the actual agreement is our own consultation process. We still need to consult at home, to consult in Cabinet, to consult the partners at Nedlac, and finally to consult Parliamentarians. So we are really going the cleanup process of ensuring that everybody is on board. As far as we are concerned as South Africa we are very much part of it. The agreement, therefore, is very much alive, it’s not dead in the water. We as South Africa want free trade in Africa because we are an important player in the African continent.”
Zambia is another country that did not sign the AfCFTA. The country was still conducting internal negotiations on some protocols in the agreement. aThis was according to a Zambian official. Zambia’s foreign minister, Joseph Malanji, said Zambia only signed the African Free Trade Area Declaration and not the agreement. He said in a statement that Zambia had negotiated the protocol on goods and services and the dispute settlement mechanism. Consequently, the remaining protocols, including on trade competition, investment, and intellectual property, were yet to be negotiated.
The Minister, however, said the signing of the declaration shows that Zambia stands with all other African countries in the quest to improve intra-Africa trade. Meanwhile, Zambia’s commerce, trade, and industry minister Christopher Yaluma said in the same statement that Zambia will not sign the protocol on the free movement of people as the country was not ready for it.
Rwanda hosted the extraordinary summit. Interestingly, it is the same year President Paul Kagame is chairing the African Union. The agreement will come into force after 22 countries ratify it in their national parliaments, which is expected to happen within the year. Thereafter, countries will be added as they ratify. The agreement commits countries to remove tariffs on 90 percent of goods, with 10 percent of “sensitive items” to be phased in later. It will also liberalize trade in services. In the future, it might include the free movement of people and a single currency.