African Free Trade Area : Opportunities and Hopes

If the African Free Trade Area is established with the huge advantages planned, it will enable Africa to redraw its trade relations with better advantages and terms, with great powers such as China, Russia and even the European Union.
In its general perspective, the African Continental Free Trade Area is much more than a mere trade agreement, as it is seen as a full-fledged tool for Africa’s development, by strategically pushing it to the continent’s integration, and laying the solid foundations for an industrial and commercial revolution and thus providing business and job opportunities in Africa. . It is also an ambitious trade agreement to create the world’s largest free trade area, if implemented, linking nearly “1.3 billion people across the 55 African countries that are member states of the African Union” (1) . The goal is to reach the desired economic integration of our African continent; In an effort to improve the investment climate and optimize the use of available resources.

In this paper, I will try to explain how and where the idea of ​​the African Free Trade Area arrived, and then I will review the available development opportunities, the obstacles and obstacles they face, and try to find solutions to how to overcome them and reach the desired goal.

How did you start and where did you get to?

The African Continental Free Trade Area was established based on the mutual desire of the member states of the African Union to ensure jobs and a better life for African people and to provide sustainable remedies for the many social and economic problems that plague the continent, including illegal immigration that takes the lives of many of our young people. Africans.

So far, “54 member states of the African Union have signed the Agreement Establishing the African Continental Free Trade Area. Forty-three member states of the African Union are party to the agreement” (2) , by virtue of having deposited the instruments of ratification of the agreement, which indicates a firm political will To achieve market integration in Africa. Pursuant to Article 13 of the Agreement Establishing the African Continental Free Trade Area, the Conference established a Secretariat for the African Continental Free Trade Area, to be located in Accra Ghana. The countries that have ratified the agreement are:

Ghana, Kenya, Rwanda, Niger, Chad, Eswatini, Guinea, Côte d’Ivoire, Mali, Namibia, South Africa, Republic of the Congo, Djibouti, Mauritania, Uganda, Senegal, Togo, Egypt, Ethiopia, Gambia, Saharan Arab Republic, Sierra Leone, Zimbabwe , Burkina Faso, Sao Tome and Principe, Equatorial Guinea, Gabon, Mauritius, Central African Republic, Angola, Lesotho, Tunisia, Cameroon, Nigeria, Malawi, Zambia, Algeria, Burundi, Seychelles, Tanzania, Cabo Verde, Morocco, Democratic Republic of the Congo.

There are 6 member states that have not yet ratified the agreement and are countries in economic organizations. In the East African Community ( EAC ) South Sudan has not ratified. In the Southern African Customs Union ( SACU ), Botswana has not yet ratified its instrument of ratification. The second coordination meeting of the heads of the regional economic communities, which was held in the Tanzanian city of Arusha, on June 7, 2022, revealed that Benin, Guinea-Bissau and Liberia, They are members of the Economic Community of West African States (ECOWAS), which have not yet become parties to the African Free Trade Area Agreement.

The African Free Trade Area Agreement was signed in March 2018, ratified by the required quorum of countries, in May 2019, and entered into force on January 1, 2021, while the first shipment under The African Continental Free Trade Agreement is coming from Ghana and heading to South Africa.

Under the Continental Free Trade Agreement, African countries pledged as a bloc to liberalize trade in most of their trade dealings by eliminating tariffs on 97% of the overall fees and payments. Since the start of implementation and so far, 44 African Union member states have submitted their tariff offers, which is a good step towards the actual implementation and full benefit of the agreement.

Development Opportunities in Africa

Naturally, this free trade zone aims to create a single common market for goods and merchandise in order to deepen the economic integration of Africa. In this regard, it is expected that “the agreement will allow the gross domestic product of the region concerned to reach about $3.4 trillion” (3) . However, in order to achieve this integrated goal of its potential, it will depend largely on important political reforms, necessary measures that must be implemented by governments in order to facilitate trade across African signatories that have already ratified the agreement.

According to recently released World Bank estimates, the implementation of the AfCFTA will lift 30 million people out of extreme poverty and 68 million people out of moderate poverty. By 2035, the volume of total exports to member countries will increase by approximately 29 percent compared to the current ratios. Exports between continents will increase by more than 81 percent, while exports to non-African countries will rise by 19 percent. All of this would create new opportunities for development for African manufacturers and workers, and for access to other foreign markets.

The African Continental Free Trade Area has a strong focus on development, specifically highlighting economic and social development and legal alignment among its objectives, and embedding aspects of the African Union’s proclaimed Agenda 2063, according to which it prioritizes comprehensive social and economic development, and links Africa’s growth and integration with Africa’s sustainable development goals.

The main development opportunities are based on specific factors through which development goals can be achieved, especially with regard to the manufacturing, agriculture and financial sectors, as well as capacity-building for African women and liberating them from ignorance and acts of violence against them. The most prominent of these factors are:

Agricultural industry development

This factor in particular is considered one of the most important agenda items that African leaders were supposed to attach great importance to achieving sufficiency and food security to avoid crises of increased food prices, which in many cases lead to famine crises, such as the crazy prices that are currently afflicting the population of the African continent as a result of war Russian-Ukrainian current. It is unreasonable for the African continent, with its fertile agricultural grounds, to depend on foreign countries for its food! This can be done by promoting industrial development, specifically industrial development related to agriculture, and food security, by providing a special government financial fund for each country to support the agricultural sector and give it priority at the expense of other sectors. Others are less important.

It is unfortunate that the agricultural sector is considered one of the semi-marginalized sectors in Africa, and this may be done by foreign parties with the aim of putting the continent in a situation of food insufficiency. Therefore, when any global or international crisis (the Russian-Ukrainian war for example), the continent becomes in danger of famine, and this What the enemies of the continent aim at is to starve the African so that his focus becomes how to satisfy his hunger instead of searching for leadership, leadership, development and prosperity, and these factors can put an end to the plunder and theft of the huge natural resources of Africa.

Development by promoting industry and trade

The World Bank estimates (2020) that within the framework of increasing total exports by about 29%, industrial exports will make the largest gains, with industrial trade within Africa increasing by 110 percent and industrial exports to the rest of the world increasing by 46%. This would create access to foreign markets in the easiest way possible.

The development opportunities in the African continent are also widely available in terms of focusing on how the people of the continent exploit the huge natural resources that abound Africa, which has made it the focus of the attention of most investors around the world. Today, we see the rush of Western, Gulf and even Latin countries to pump their investments in Africa, including from It invests on the principle of profit for both sides, but unfortunately there are those who invest to reap profits for themselves and for a certain category of corrupt rulers, and thus peoples and countries become the first losers.

Development opportunities are available in many fields in the African continent and the Free Trade Agreement reinforces this theory. Young people can now implement and innovate small and medium-sized businesses for start-ups within Africa and can make good profits, instead of looking for illegal asylum methods that cost a lot of money and sometimes end They end up dying.

Obstacles and obstacles: what is the solution?

Of course, there are many obstacles facing the activation of the free trade area, the most important of which are:

First : The lack of a conducive infrastructure to facilitate transportation between countries. Indeed, some African countries have started clear measures to improve infrastructure, including Tanzania, which is working to build a high-quality and standard road network that connects it with neighboring countries. “The Tanzanian President, Samia Hassan, won the Babacar India Award for Road Builders in Africa for 2022” (4) , Other countries should follow suit.

Second : The financial development institutions do not have the ability to be in a good position to mobilize the private capital needed for the vital sectors related to trade. Governments must allocate a financial fund to support the financial institutions, which in turn will distribute them to the concerned and more important sectors, such as agriculture and industry, and give them priority over other sectors. . There are those who believe that industry is more important than agriculture, but for Africa, the priority is self-sufficiency and food security. Man by nature cannot work or manufacture without first securing his food.

Third : Concerns of LDCs about losses in tariff revenue and unequal distribution of costs and benefits to countries: Necessary measures and flexibility in laws between countries should be explored for equitable sharing of costs and benefits, and to achieve the full long-term benefits of the CFTA, and thus in the long run will lead Liberalizing trade in the region will generate profits which will of course lower trade costs, and will allow consumers to access a wider range of products at lower prices and with equal opportunity.

There are certainly other challenges to be overcome, such as the payment system; As most African currencies are not usable outside their countries, but efforts to solve this dilemma are now underway to use a payment system that suits everyone in cooperation with Afreximbank .

In addition, there is an obstacle represented in making coordination to help producers and traders on the one hand, and informing consumers of the location of the availability of desired goods and services on the other hand.

In some African countries, trading with foreign companies is a major challenge; These companies obtain African natural resources with disproportionate returns, corrupt ruling elites, and support the practice of authoritarian or pseudo-democratic rule. Some companies may contribute to igniting armed conflicts, such as what is happening in the Democratic Republic of the Congo, to steal their resources. African countries also face challenges towards integrated industrialization, in order to meet the requirements of the continent on the one hand, and in line with the requirements of current developments on the other. In this regard, some African countries have begun to ban the export of their main commodities in their initial form. Ethiopia has banned the export of coffee, and West African countries that produce cocoa have begun to seek to ban it and want to manufacture chocolate instead of exporting it. In Tanzania, too, it actually started banning the export of gold in its primary form and started setting up many local gold factories.

It is assumed that the current educated African generation is aware of the need for the independence of the continent and its liberation from Western colonialism, and that this generation is the current and future catalyst for achieving African integration and consequently the development and prosperity of the continent by achieving self-sufficiency in all basic welfare factors without the need for foreign assistance. Achieving this roadmap, although rugged, will achieve this goal with concerted efforts.

a summary

The African Continental Free Trade Area will contribute to increasing market access rates, and will be able to grow significantly, especially in the areas of agriculture, manufacturing, industrial development, as well as tourism through cooperation between African countries, economic transformation, and building a relationship based on respect and peer-to-peer between Africa and the rest of the world .

But in order to achieve the integrated and desired goal of this agreement, the African countries must in the first place work as a single bloc in order to overcome the obstacles they face, renounce all regional differences and work together for the benefit of African unity and consider how to deal with international blocs on the principle of win-win for both sides without violating African rights .

According to international statistics, Africa will have a total consumer and trade spending of 6.7 trillion dollars by 2030, and 16.12 trillion dollars by 2050, which creates a unique opportunity for individuals and companies, and this means that the region is among the largest commercial areas in the world and will become the focus of attention of trade blocs other in the world.

When the desired goal of the African Free Trade Area is completed with these huge advantages, the continent will also be able to redraw its trade relations with better advantages and terms, with other great powers such as China, Russia and even the European Union.

About the author

Shamsan Awad Al-Tamimi

Tanzanian researcher and journalist.REFERENCE

(1)- The African Continental Free Trade Area, the world bank, 27 July (access 21 September 2022)  https://www.worldbank.org/en/topic/trade/publication/the-african-contin…

(2)- Status of AfCFTA Ratification, “tralac site” 3 May 2022, (access 21 September 2022) https://www.tralac.org/resources/infographic/13795-status-of-afcfta-rat…

(3)- Guide to Exporting to African Continental Free Trade Area, UNDP, 5 October 2021 (access 21 September 2022) https://www.undp.org/botswana/publications/guide-exporting-african-cont…

(4)- Africa Road Builders, 2022 Babacar Ndiaye Trophy, 7 April 2022 (access 21 September 2022) https://www.afdb.org/en/news-and-events/press-releases/africa-road-buil…