An Examination of the African Continental Free Trade Agreement: Has the Promise Been Fulfilled or Is It a Bust?
Title: An Examination of the African Continental Free Trade Agreement: Has the Promise Been Fulfilled or Is It a Bust?
The African Continental Free Trade Area (AfCFTA), a monumental agreement, was designed with the aspiration of establishing the world’s largest free trade area. This ambitious initiative was intended to bring together 1.3 billion people across 55 countries, creating a combined GDP of US$3.4 trillion. The vision of AfCFTA was painted as a future where seamless trade across the continent would be a reality. The dream was that purchasing professional work clothes from Rwanda or a book from Nigeria would be as simple as a few clicks, without the burden of exorbitant shipping costs. However, the question that arises is whether this promise has been fulfilled or if the AfCFTA is a bust.
Significant strides have been made by the AfCFTA, such as the elimination of trade barriers, the promotion of inclusivity and industrialization, the initiation of guided trade initiatives, a focus on trade in services, the garnering of political commitment, the ratification by member countries, the development of operational tools, the establishment of a dispute settlement mechanism, the creation of an SME financing facility, and the elimination of non-tariff barriers.
AFCFTA Achievements
-Eight countries are now part of the Guided Trade Initiative, facilitating trade and matchmaking businesses. In 2023, the focus is on Trade in Services, with priority areas like tourism, transport, and financial services.
Guided Trade Initiative comes is a helpful market guide for eight countries involved in the AfCFTA. This guide helps these countries find the right trading partners, almost like a matchmaker. It ensures that businesses in these countries can effectively trade their goods and services with each other, making the whole process smoother and more efficient.
-46 countries have ratified the agreement, and the African Union has declared 2023 as the ‘Year of AfCFTA’ to accelerate implementation.
-Operational tools are being enhanced, the Dispute Settlement Body is active.The Dispute Settlement Body (DSB) of the African Continental Free Trade Area (AfCFTA) is like a court for trade disagreements between countries. When countries that are part of the AfCFTA have a disagreement or conflict about trade rules or practices, they can’t just argue amongst themselves or take actions that could harm each other’s economies. They need a fair and neutral place to resolve their issues.
-The SME Financing Facility is operationalized which will catalyse access to finance for SME business activities is supporting small businesses. Plus, efforts are underway to eliminate non-tariff barriers!”
These achievements are noteworthy and have laid the foundation for a more integrated African economy.
MISSED MILESTONES
However, the journey has not been without its challenges. A disparity in economic development and industrial capacity among the 55 countries has been observed, leading to uneven progress in the implementation of the agreement. It has been noted that some countries are ready to export immediately under AfCFTA rules, while others require more time.
The enforcement capacity of the harmonized rules has also been identified as a challenge. While an annex on trade facilitation, transit, and harmonized customs procedures rules exists, it has been observed that countries are at different levels of readiness when it comes to enforcement capacity. This has necessitated ongoing work to build the capacity of customs authorities to enforce the rules of origin.
Negotiations in the area of e-commerce and intellectual property rights are still ongoing even though the goal was to conclude these negotiations by the end of 2022. The COVID-19 pandemic has been identified as a barrier to progress in this area.
The Pan-African Payment and Settlement System (PAPSS), a platform intended to facilitate free trading, was launched in January 2022. However, questions have been raised about how widely it has been adopted and whether it has fully met its goal of enabling trading in local currencies.
In conclusion, while several important milestones have been achieved by the AfCFTA, there are areas where progress has been slower than expected, and some goals have not yet been fully met. The challenges of economic disparities among member countries, enforcement capacity, and ongoing negotiations on e-commerce and intellectual property rights are some of the key areas where difficulties have been faced by the AfCFTA.
HOPE….
Despite these challenges, the AfCFTA remains a beacon of hope for the African continent. It is a work in progress, and with continued commitment and collaboration among member countries, the promise of a seamless, integrated African market can be realized. The journey towards this vision is ongoing, and it is hoped that the promise of AfCFTA will be fully realized in the near future.