The launch of the African Continental Free Trade Agreement (AfCFTA) on New Year’s Day is historic. However, its full implementation may take years. The pact was supposed to have kicked off earlier but suffered delays due to the COVID-19 outbreak. AfCFTA is now the largest free trade area since the establishment of the World Trade Organization.
Congratulations to the @_africanunion for the launch of the start of trading of the #AfCFTA — the largest free trade zone in the world. @VayaAfrica elogistics platform is ready to contribute to the success of #afcfta and drive trade across our now borderless continent. pic.twitter.com/RyhBGoGl4C
— Vaya Africa (@VayaAfrica) January 2, 2021
The initial date for the launch of AfCFTA was 1st July 2020. However, COVID-19 restrictions made in-person negotiations difficult. Inasmuch as the launch is a win on its own, obstacles like poor infrastructure and ubiquitous red tapes need to be overcome for the bloc to reach its full potential. Interestingly, only Eritrea is yet to sign onto the AfCFTA framework agreement.
— Easy does it (@melafela) January 7, 2021
Upon full implementation, the AfCFTA will unite 1.3 billion people on the African continent. Those in favor of the $3.4 trillion economic bloc say it will boost trade among the neighbors while allowing the continent to grow at its pace. By 2035, the World Bank projects that the trading bloc will lift tens of millions out of poverty. But, will the formation of a new economic bloc be enough to change Africa’s consumption pattern and preference for foreign goods?
Long-term social and economic benefits of the AfCFTA
The first foreseeable benefit of AfCFTA is the potential to make Africa more self-reliant. While Africa is a huge exporter of primary commodities, it imports the majority of its consumer products. With the disruption from the COVID-19 pandemic, many countries had to deal with the shortage of essential goods. The secretary-general of the AfCFTA secretariat, Wamkele Mene, said this adds impetus to the new economic bloc. He said,
“COVID-19 has demonstrated that Africa is overly reliant on the export of primary commodities, overly reliant on global supply chains. When the global supply chains are disrupted, we know that Africa suffers. This is our hope for Africa to be lifted up out of poverty. We have to dismantle the colonial African model that we inherited and sustained over the last 50 years.”
Filled with optimism during the online launch, the Ghanaian president, Nana Akufo-Addo said, “There is a new Africa emerging with a sense of urgency and purpose and an aspiration to become self-reliant.” By boosting intra-African trade, member countries will see the need to pay more attention to the development of local industries.
I was reflecting on the fact that the pandemic has kept a lot of countries busy so Africa can have relatively peaceful elections, transitions, and the launch of the AfCFTA.
Looking forward to more of this Africa.
Anyways, enjoy this spectacular view. pic.twitter.com/lrvEsZJbVF
— Nathalie Munya (@nathmunya) January 2, 2021
Africa’s path to economic sustainability is a marathon, not a sprint. However, AfCFTA is a long stride in the right direction. A senior fellow at the Center for Global Development, W Gyude Moore, told Reuters “It will be surprising to have everything set up in 24 months”. He also highlights the need for Africa to look at Europe to see how long it took them. Hopefully, in the nearest future, like Europe, Africans will get to travel visa-free among member states.
Proud to see the launch of #AfCFTA. Still a long way to go before we see the real impact on the continent but the Agreement has the potential to drive African integration and transformation. (1)
— Faisal the Wanderer (@FaisalWando) January 2, 2021
Why AfCFTA may fail to lower western reliance by Africans
Political unrest, lack of or poor rail and road links, corruption, and excessive border bureaucracy are the major threats on the path of AfCFTA’s success. Sadly, these problems will not disappear overnight. Inasmuch as Africa has enviable industries making products that can match the western counterparts, getting these products to other countries within the continent is often difficult because of the aforementioned problems.
At an average of 6.1% tariff when exporting within Africa, it is cheaper to export outside the continent. Sadly, western products often don’t go through the same level of scrutiny and tariff hike. Does this amplify the saying that ‘Africans don’t like Africans’? Perhaps so, some would say.
Africa is over reliant on imports, will the launch of @AfCFTA reduce this?
Please give an example, it's been 5 days now since the start of trading under AfCFTA
— mycoolerbox (@mycoolerbox) January 6, 2021
Also, the rules of the AfCFTA deal—particularly which products will be exempt from tariffs and duties—is not yet complete. The grand goal is for members to phase out 90% of tariff lines. However, only 41 of the 54 member nations have handed in their tariff reduction schedules. Implementing this deal will likely not happen without resistance from countries that fear losing to stronger competitors.
South Africa’s Trade and Industry Minister Ebrahim Patel on Friday urged manufacturers and farmers in the country to prepare themselves for opportunities in export markets following the launch of the African Continental Free Trade Agreement (AfCFTA) https://t.co/Opg5DLe0P9
— Vanguard Newspapers (@vanguardngrnews) January 2, 2021
Another important point to mention here is that many Africans have built a consumption habit around European products. As you already know, old habits die hard. Getting them to swap their current products for an African-made alternative will not be an easy feat.
It is interesting to know that Africans are rising up to the changing global realities. Obviously, Africa cannot compete with Europe or America in terms of export. Therefore, it makes sense for the member nations within the continent to compete with themselves. It will be interesting to see how the AfCFTA deal progresses and how it will impact the continent—if at all it would. While we wait, what are your expectations for the new trading bloc? Leave your comment in the box below.