The Africa Continental Free Trade Area (AfCFTA) by Papa Owusu, Impact Investing Intern

     

Photo: Mr. Owusu, CIR Intern, Franklin and Marshall, Ms. Muyangwa, Director, Africa Program at the Wilson Center, Mr. Zheng, CIR Intern, Georgetown University.

        The Wilson Center's event on opportunities and challenges of the Africa Continental Free Trade Area (AfCFTA) was insightfully supportive of the new trade agreement. Trade refers to the transfer of goods and services from one person or entity to another, often (but not always) in exchange for money. A Free Trade Zone (FTZ), is a geographic area where goods may be traded without the imposition of any barriers by customs authorities. These barriers include tariffs and quotas. Free Trade Zone examples include the North American Free Trade Agreement and the Southern African Development Community Free Trade Area.  The AfCFTA seeks to create a unified continental market with minimal trade and migration barriers and unified trade policies to facilitate the easy movement of people, goods and services. Currently, 44 of 55 African Union member states have signed the agreement.

Non-signing states such as Nigeria may fear that the agreement will undermine national interests in trade, employment and local industry. They may also fear the agreement will impact revenue generation. Other issues with the agreement relate to the possibility of dumping cheap goods in neighboring states, thereby damaging local industries. These fears are valid and need to be considered in the final agreement. Existing trade agreements address some of these issues to a limited extent. For example, the World Trade Organization rules address dumping.

    The AfCFTA is expected to greatly benefit the continent. First, it should result in greater regional integration and make Africa a bigger player on the international trade scene. The United Nations Economic commision for Africa estimates that AfCFTA could lead to a 52.3 percent increase in regional trade. Further, AfCFTA is expected to make the continent more attractive to investors due to reduced trade barriers and a greater ability to take advantage of economies of scale.

      The panelists at the Wilson Center ( H.E. Dr. Arikana Chihombori Quao, Permanent Representative of the African Union to the United States of America, Donald Kaberuka
African Union High Representative for Financing of the Union and Peace Fund and 7th President of the African Development Bank (2005-2015), H.E Étoundi Essomba, Ambassador of Cameroon to the United States and, Co-Chair of the African Ambassadors’ Group, H.E. Kerfalla Yansane
Ambassador of Guinea to the United States) noted that AfCFTA is a first step towards realizing the vision of African co-operation expressed by African independence leaders such as Kwame Nkrumah, of Ghana.

       A key warning is that complementary measures, like better internal infrastructure linking member countries, are necessary to fully realize the benefits of AfCFTA. The African transportation infrastructure was designed, historically, by colonial powers to move people, goods and resources from the interior of the continent to the ports. There is little by way of internal continental transportation infrastructure. The map at left shows the PLANNED highway system. Even this effort has been delayed. This remains a huge issue.

       The main takeaway from the event was that the AfCFTA has the potential to make Africa more integrated and a bigger economic player in the world market.